11 ms·

Consumer startups that said no to investor money

161 points by gavman 8y ago

sharemywin 8y ago
I imagine the investors were happy too if they went from 500k to 20m.
monksy 8y ago
I think this is a great thing. The VC influence has caused product quality to slip a lot, the customer needs to be ignored, and has focused on preferring engineering to rush things. That's a long-term focus on undermining the economy. (Being quick to build something, and only being quick isn't a feature)
edoceo 8y ago
My most recent company has been built w/o outside fundimg. 10/10 Rasing money takes a lot of energy.
acconrad 8y ago
I'm not surprised. The default for starting a startup seems to be that you need VC funding because you need to monopolize as fast as possible and having extra cash will allow you to get there sooner than if you were to bootstrap. What we're seeing is that growth is able to happen in spite of the frothy VC environment, not because of it. So if it is possible, then why would you have to seek funding? If you think getting VC money is good because you should get VC funding (or because getting some will get you press in TechCrunch) then you're thinking about it all wrong. You should seek VC money if you need the money (with a very serious definition of "need"). If you don't, why would you: * Have a boss (outside of your customers) * Give up a board seat * Give up control of your company (and possibly eventually a majority of that control) If you need enough money that doing the above 3 things is less painful than basically your business dying, then yes, you should seek funding. Actually I want to emphasize the "less painful" part. Don't read this as "if your business will die otherwise, seek funding." Sometimes you should let a business die. If family is important to you and raising VC money and working even harder to keep someone else happy will possibly end your marriage, and ending your marriage is more painful than keeping this startup alive, you should probably let the startup die. And that's okay! What matters is you seek VC money for a very specific reason, and it is vital for you and your business for the right reasons.
- lilbobbytables 8y ago
  Do you believe it's worth taking on investors to bring in people that have both connections and input that will be helpful for growing your product?
  - cardine 8y ago
    Get a business coach and extensively network - or just focus on product market fit and the connections will come. I guarantee you that will be far cheaper than the millions of dollars worth of equity you would be giving up. I agree with the parent, raise VC money only if you absolutely need money.
    - Gibbon1 8y ago
      Notable there is a tendency for VC's to start staffing up your company with their overpaid and under performing associates. Since you no longer have full ownership you can't fire them either. Often those guys real job is to serve as place holders for when the VC's push out you and your senior managers. So when the company is acquired they are the ones that get the retention bonuses not you.
  - acconrad 8y ago
    You can bring in advisors - they have connections and can provide input without requiring they give you cash and in exchange they will take significantly less equity.
  - convolvatron 8y ago
    the most important thing I've found is the marketing/press around raising itself. particularly if the VC in question is seen as selective and top tier. that has some nice benefits around getting decent legal counsel, banking, recruiting, etc. everyone treats 'foo ventures' backed companies with more consideration by default. otherwise..meh..most of the people they are really excited for you to meet (i.e. bring on as VP whatever), aren't that interesting. and while yes, you may get a few forced sales because you share a VC with someone, in some sense thats strictly less valuable than organic growth. the VC is always going on about how valuable they are going to be to you...the reality is that if you aren't going to fulfill _their_ vision for your company soon enough, they will do everything they can to restructure the company so that someone else can.
steven2012 8y ago
I was sad to see Tuft and Needle get acquired by Serta. I bought 3 TN mattresses from their post here, and I love them. I vociferously recommended them to anyone I know. I really doubt their quality will continue to be maintained now that they are in the grips of Serta, but I guess next time I am in the need for a mattress in about 10 years, I'll check.
- jtmarino 8y ago
  Hey this is JT, Tuft & Needle co-founder. Firstly, thanks for all your support and please send any feedback or thoughts any time. I'm at jt@tn.com. Since we started Tuft & needle in 2012, we've been bootstrapped and have been growing very fast while being profitable. We didn't view this merger as something that we needed to do. But it was something that we knew if done right and everything aligned with our goal of completely disrupting (converting it to being customer focused) the mattress industry from beginning to end, we would do it. This wasn't a typical acquisition. Tuft & Needle combining with Serta Simmons was a merger operationally, legally, and financially. My co-founder Daehee and I structured the deal with Serta Simmons in such a way that we would have maximum impact towards accelerating the transformation of the industry. Daehee and I will be joining the executive team of the combined company, leading with the goal of both internal and external transformation. Our team in Phoenix will be not only be focused on growing Tuft & Needle, but also for dusting off Serta Simmons' other brands and implementing everything that we've learned and built to the other brands. Regarding quality, what's really exciting for us is that through this merger we will be able to accelerate our product, feature and service roadmaps for Tuft & Needle. What we could do in 5 years we can now do it almost immediately. Specifically regarding quality and pricing, this is actually best case scenario for our customers, because we'll have access to more efficiencies to make our value and innovations even better. Again, thanks for your support. This is going to take a lot of time and a lot of work. What we expected and hoped from our customers is cautious optimism that we can then validate and prove over the coming years that this merger was definitely the greatest step we could have taken for our customers and the market as a whole.
adventured 8y ago
I took VC for my last company. I'm choosing not to do it this time around. What I'm working on has at least a planned ten year horizon at the outset, hopefully it extends beyond that (the cost is so low to do it, I can stay in it perpetually without concern, and have decided the end goal is worth it). It requires long-term planning and thinking, there will be no exit pursued. Venture capital is a mediocre option in that environment, they almost always need an exit (there are some prominent angels that will stay in long-term, be sure to filter for that upfront). Most venture capitalists will burn your corporate house down or drive you into a wall at 120mph in the pursuit of their homerun, whereas I'm willing to eat my time in the pursuit of getting where I want to go with it. If it takes years to get it right, that's ok. The other reason: I won't allow liquidity preferences, VC gets to ride in the same boat as every other share owner (or not at all). The last VC I took on met those terms, it's very difficult to find however. If there's one thing all start-ups should conspire to abolish, it's liquidity preferences. Somewhere along the line, they all decided that putting their capital at risk in exchange for a potentially large return, wasn't a good enough arrangement. At that point they stopped being real investors and became financial engineers looking to play the angles to remove risk from their position and shift their risk to everyone else. You don't need venture capital that bad, such that shooting yourself in the face is the only way to go. Just say no.
- Stryder 8y ago
  "At that point they stopped being real investors and became financial engineers looking to play the angles to remove risk from their position and shift their risk to everyone else." Sadly this seems to be the game being played by literally every person and their grandma these days. We need a mentality shift as a society in order to find real innovations and growth again, or else, well we're just digging our own graves really.
- chetanahuja 8y ago
  > If there's one thing all start-ups should conspire to abolish, it's liquidity preferences. Liquidation preferences are not the norm in the normal seed/A/B rounds etc. right now. At least not in the silicon valley VC ecosystem.
andyidsinga 8y ago
We're following a very similar philosophy of bootstrapping a set of businesses we're working on [1]. reasons are : 1. we want to stay flexible and put out a variety of businesses that might not be similar except in that we're leveraging our skills to build them. From my experience in venture funded startups - once you take funding for that business - radically changing direction or adding unrelated businesses seems impractical. 2. we want to keep full control and ownership - so that if an opportunity arises to sell the business we can do it with minimal hassle. 4. we're skeptical of our own ability to raise vc; and worried about all that that exercise entails - especially the potential distractions. [1] "Yukon Data Solutions" is our first; we have a few other analytics related businesses in the pipeline; but also, interestingly some direct to consumer products that sort of fall into the "fashion" category.
andyidsinga 8y ago
Related to this - there is a podcast ep on "How I built this" with the Wayfair people. I find it very interesting that they built several businesses - and then got investment to build the Wayfair brand and bring those businesses under that brand. https://www.npr.org/2018/06/07/601985854/wayfair-niraj-shah-steve-conine https://www.npr.org/2018/06/07/601985854/wayfair-niraj-shah-...
eitally 8y ago
I think it's stupid to overuse the term "startup" where it doesn't make sense. At what point is something just a new small business? Is there an arbitrary set of lines that differentiate between "startups" and every other new enterprise? The vast majority of new businesses are funded solely by personal savings, friends & family, and SBA loans. Conflating something like a deodorant company with a pure play tech startup just doesn't make any sense to me, especially when the intent is to analyze and compare funding models, performance and exits. And even if you consider new SaaS companies, there are thousands more Bingo Card Creators out there than [insert unicorn here].
- andyidsinga 8y ago
  Agreed about the definition of "startup" vs small business - murky. That said, I think the article positioned their definition of startup by comparing bootstrapped/less-funded companies to Honest (also referenced Honest's challenges vis a vis Seventh Generation).
- tchaffee 8y ago
  We could also flip that around. Startups are nothing more than small businesses. Most will fail. A few will go on to become somewhat bigger. One out of a million becomes a Ralph Lauren empire. What's the difference really between a small business and a startup?
  - kerng 8y ago
    Startup just sounds cooler, that's why - in reality there isn't a difference. A single parent starting up a hair salon or restaurant is also a startup, it's just a new business being set in motion.
  - mikenyc 8y ago
    http://www.paulgraham.com/growth.html http://www.paulgraham.com/growth.html
    - tchaffee 8y ago
MicahKV 8y ago
I've been reading about VC and all it entails for years now, and it always leaves me with a sketchy feeling. Pouring so much time and effort into chasing capital, and then giving up so much ownership and being on the hook for big returns once it's finally attained... seems like a sure way to suck the soul out of any business. Not saying VC doesn't have a place in the world, but I get the sense that a lot of founders pursue VC just because that's what startups are "supposed" to do.
- Stryder 8y ago
  The nature of VC is to build portfolios. The success and failures of individual companies within that portfolio matter very little- what matters a lot more is whether the lessons learned and knowledge/IP generated can spill over to other portfolio companies to eventually produce winner(s) somewhere. The success of the portfolio is what matters to the firm, and the returns are what matter to the LPs. It is what it is, so entrepreneurs should use it for what it is. The hype over the past decade has been ridiculous.
dcole2929 8y ago
One of the things I really like about this article is the story of Tuft & Needle. One of the biggest reasons (imo) why there are relatively few minority founders is because of the lack of access to inter-generational wealth. If you are poor or come from a poor background it's hard to build the requisite capital necessary from a friends and family round because often times they just don't have it. Now as a founder you find a way, but still it's nice seeing a success story of a company that started with only $6k. That's money that most engineers could save up relatively easily.
cannabisceo 8y ago
If you're a consumer brand you can turn to factoring and vendor financing to run your business. There's more options open to you.
aero- 8y ago
This headline is misleading. Native raised venture capital, it wasn't disclosed but there's plenty of PR surrounding it. Tuft and Needle was started by engineers that had a good bit of personal cash saved in the bank, then later borrowed $500,000. MVNT raised Money. It's not like these companies didn't raise a bunch of money, they just didn't use VC $$ supposedly. The common denominator here is the direct to consumer model with the use of growth hacking via social media campaigns and the rise of such social media platforms. I.E. Make product that people want to buy and market it efficiently on social channels.
- bsder 8y ago
  I don't really consider these companies to be "startups" because they don't have to solve some technical problem. These kinds of consumer "cosmetics" companies have always run like this. They are about marketing, not product. If you want an education, go to the MD&M West show and sit on the parking shuttle bus and listen. There are a zillion of these kinds of companies all hawking almost exactly the same products looking for some marketing and sales "edge". None of them are solving "we're actually technically better". Kudos to these companies for finding that marketing and sales edge, but I don't really consider that to be a "startup".
  - jtmarino 8y ago
    Not all disruption is purely technical. In the mattress industry the disruption is more around process. Direct to consumer, service, product iteration with direct customer feedback, more vertical. There are technical innovations (foam chemistry) but that's not something that I would consider disruptive. Historically, mattress manufacturers (the big brands) sell direct to retailers with little to no customer feedback or service. The stores resell (middlemen adding to the customer cost) with little to no customer feedback passed back to the brands. The supply chain was very difficult to break into because it was guarded from new direct to consumer entrants.
    - aero- 8y ago
      I read an article recently on the behind the scenes lawsuits with these paid bloggers in the mattress review industry. https://www.fastcompany.com/3065928/sleepopolis-casper-bloggers-lawsuits-underside-of-the-mattress-wars https://www.fastcompany.com/3065928/sleepopolis-casper-blogg... It seems like these guys generated a tremendous amount of money for themselves and orders for the businesses based on which company they gave the OK to. You guys seemed to stay out all that, which I really respect, but it looked like some competitors really went to lengths to get that "edge" in this product category.
ikeboy 8y ago
I met the native guy recently at a conference. He's seriously one of the most impressive stories I've ever heard - 2 years, 1 product, only sold on their site, 100M exit, vast majority going to him. He talked about testing a ton of variations (over 100 overall) of their product by selling batches of a couple thousand and tracking return rate, reviews, and reorder rate. Get the best product after extensive customer testing, get the best ads after extensive a/b ad testing, scale up profitable ad spend.
epynonymous 8y ago
refreshing article, i have what i consider to be a potential small business, it's not as attractive i'd assume to investors as most things these days that have something to do with blockchain, machine-learning, self-driving cars, or billion dollar valuations, but i think there's potential for a very nice business that could potentially evolve into a lifestyle business and it doesn't need hordes of employees, i've been doing everything from development of backend services, platform, and front end mobile app, to marketing, testing, product management all on my own. obviously having a couple more people to help with sales and development would speed things up, but i don't need a 50 person team at the moment. having read this article and buffer.com's recent buyout of investors, it shows that there are potential alternate routes to success. i can understand the nature owner not feeling good in the beginning when everyone around him's talking about billion dollar valuations and series a, b, c funding, but it seems he sold for several hundred million which seems like sweet vindication. obviously most small businesses fail and eventually need some sort of funding whether from a small business loan or bootstrapping, etc, but it's manageable. https://madsportslab.com https://madsportslab.com

161 points by gavman 8y ago

I imagine the investors were happy too if they went from 500k to 20m.

I think this is a great thing. The VC influence has caused product quality to slip a lot, the customer needs to be ignored, and has focused on preferring engineering to rush things. That's a long-term focus on undermining the economy. (Being quick to build something, and only being quick isn't a feature)

edoceo 8y ago

My most recent company has been built w/o outside fundimg. 10/10 Rasing money takes a lot of energy.

acconrad 8y ago

I'm not surprised. The default for starting a startup seems to be that you need VC funding because you need to monopolize as fast as possible and having extra cash will allow you to get there sooner than if you were to bootstrap. What we're seeing is that growth is able to happen in spite of the frothy VC environment, not because of it. So if it is possible, then why would you have to seek funding? If you think getting VC money is good because you should get VC funding (or because getting some will get you press in TechCrunch) then you're thinking about it all wrong. You should seek VC money if you need the money (with a very serious definition of "need"). If you don't, why would you: * Have a boss (outside of your customers) * Give up a board seat * Give up control of your company (and possibly eventually a majority of that control) If you need enough money that doing the above 3 things is less painful than basically your business dying, then yes, you should seek funding. Actually I want to emphasize the "less painful" part. Don't read this as "if your business will die otherwise, seek funding." Sometimes you should let a business die. If family is important to you and raising VC money and working even harder to keep someone else happy will possibly end your marriage, and ending your marriage is more painful than keeping this startup alive, you should probably let the startup die. And that's okay! What matters is you seek VC money for a very specific reason, and it is vital for you and your business for the right reasons.

lilbobbytables 8y ago
Do you believe it's worth taking on investors to bring in people that have both connections and input that will be helpful for growing your product?
- cardine 8y ago
  Get a business coach and extensively network - or just focus on product market fit and the connections will come. I guarantee you that will be far cheaper than the millions of dollars worth of equity you would be giving up. I agree with the parent, raise VC money only if you absolutely need money.
  - Gibbon1 8y ago
    Notable there is a tendency for VC's to start staffing up your company with their overpaid and under performing associates. Since you no longer have full ownership you can't fire them either. Often those guys real job is to serve as place holders for when the VC's push out you and your senior managers. So when the company is acquired they are the ones that get the retention bonuses not you.
- acconrad 8y ago
  You can bring in advisors - they have connections and can provide input without requiring they give you cash and in exchange they will take significantly less equity.
- convolvatron 8y ago
  the most important thing I've found is the marketing/press around raising itself. particularly if the VC in question is seen as selective and top tier. that has some nice benefits around getting decent legal counsel, banking, recruiting, etc. everyone treats 'foo ventures' backed companies with more consideration by default. otherwise..meh..most of the people they are really excited for you to meet (i.e. bring on as VP whatever), aren't that interesting. and while yes, you may get a few forced sales because you share a VC with someone, in some sense thats strictly less valuable than organic growth. the VC is always going on about how valuable they are going to be to you...the reality is that if you aren't going to fulfill _their_ vision for your company soon enough, they will do everything they can to restructure the company so that someone else can.

steven2012 8y ago

I was sad to see Tuft and Needle get acquired by Serta. I bought 3 TN mattresses from their post here, and I love them. I vociferously recommended them to anyone I know. I really doubt their quality will continue to be maintained now that they are in the grips of Serta, but I guess next time I am in the need for a mattress in about 10 years, I'll check.

jtmarino 8y ago
Hey this is JT, Tuft & Needle co-founder. Firstly, thanks for all your support and please send any feedback or thoughts any time. I'm at jt@tn.com. Since we started Tuft & needle in 2012, we've been bootstrapped and have been growing very fast while being profitable. We didn't view this merger as something that we needed to do. But it was something that we knew if done right and everything aligned with our goal of completely disrupting (converting it to being customer focused) the mattress industry from beginning to end, we would do it. This wasn't a typical acquisition. Tuft & Needle combining with Serta Simmons was a merger operationally, legally, and financially. My co-founder Daehee and I structured the deal with Serta Simmons in such a way that we would have maximum impact towards accelerating the transformation of the industry. Daehee and I will be joining the executive team of the combined company, leading with the goal of both internal and external transformation. Our team in Phoenix will be not only be focused on growing Tuft & Needle, but also for dusting off Serta Simmons' other brands and implementing everything that we've learned and built to the other brands. Regarding quality, what's really exciting for us is that through this merger we will be able to accelerate our product, feature and service roadmaps for Tuft & Needle. What we could do in 5 years we can now do it almost immediately. Specifically regarding quality and pricing, this is actually best case scenario for our customers, because we'll have access to more efficiencies to make our value and innovations even better. Again, thanks for your support. This is going to take a lot of time and a lot of work. What we expected and hoped from our customers is cautious optimism that we can then validate and prove over the coming years that this merger was definitely the greatest step we could have taken for our customers and the market as a whole.

adventured 8y ago

I took VC for my last company. I'm choosing not to do it this time around. What I'm working on has at least a planned ten year horizon at the outset, hopefully it extends beyond that (the cost is so low to do it, I can stay in it perpetually without concern, and have decided the end goal is worth it). It requires long-term planning and thinking, there will be no exit pursued. Venture capital is a mediocre option in that environment, they almost always need an exit (there are some prominent angels that will stay in long-term, be sure to filter for that upfront). Most venture capitalists will burn your corporate house down or drive you into a wall at 120mph in the pursuit of their homerun, whereas I'm willing to eat my time in the pursuit of getting where I want to go with it. If it takes years to get it right, that's ok. The other reason: I won't allow liquidity preferences, VC gets to ride in the same boat as every other share owner (or not at all). The last VC I took on met those terms, it's very difficult to find however. If there's one thing all start-ups should conspire to abolish, it's liquidity preferences. Somewhere along the line, they all decided that putting their capital at risk in exchange for a potentially large return, wasn't a good enough arrangement. At that point they stopped being real investors and became financial engineers looking to play the angles to remove risk from their position and shift their risk to everyone else. You don't need venture capital that bad, such that shooting yourself in the face is the only way to go. Just say no.

Stryder 8y ago
"At that point they stopped being real investors and became financial engineers looking to play the angles to remove risk from their position and shift their risk to everyone else." Sadly this seems to be the game being played by literally every person and their grandma these days. We need a mentality shift as a society in order to find real innovations and growth again, or else, well we're just digging our own graves really.
chetanahuja 8y ago
> If there's one thing all start-ups should conspire to abolish, it's liquidity preferences. Liquidation preferences are not the norm in the normal seed/A/B rounds etc. right now. At least not in the silicon valley VC ecosystem.

andyidsinga 8y ago

We're following a very similar philosophy of bootstrapping a set of businesses we're working on [1]. reasons are : 1. we want to stay flexible and put out a variety of businesses that might not be similar except in that we're leveraging our skills to build them. From my experience in venture funded startups - once you take funding for that business - radically changing direction or adding unrelated businesses seems impractical. 2. we want to keep full control and ownership - so that if an opportunity arises to sell the business we can do it with minimal hassle. 4. we're skeptical of our own ability to raise vc; and worried about all that that exercise entails - especially the potential distractions. [1] "Yukon Data Solutions" is our first; we have a few other analytics related businesses in the pipeline; but also, interestingly some direct to consumer products that sort of fall into the "fashion" category.

andyidsinga 8y ago

Related to this - there is a podcast ep on "How I built this" with the Wayfair people. I find it very interesting that they built several businesses - and then got investment to build the Wayfair brand and bring those businesses under that brand. https://www.npr.org/2018/06/07/601985854/wayfair-niraj-shah-steve-conine https://www.npr.org/2018/06/07/601985854/wayfair-niraj-shah-...

eitally 8y ago

I think it's stupid to overuse the term "startup" where it doesn't make sense. At what point is something just a new small business? Is there an arbitrary set of lines that differentiate between "startups" and every other new enterprise? The vast majority of new businesses are funded solely by personal savings, friends & family, and SBA loans. Conflating something like a deodorant company with a pure play tech startup just doesn't make any sense to me, especially when the intent is to analyze and compare funding models, performance and exits. And even if you consider new SaaS companies, there are thousands more Bingo Card Creators out there than [insert unicorn here].

andyidsinga 8y ago
Agreed about the definition of "startup" vs small business - murky. That said, I think the article positioned their definition of startup by comparing bootstrapped/less-funded companies to Honest (also referenced Honest's challenges vis a vis Seventh Generation).
tchaffee 8y ago
We could also flip that around. Startups are nothing more than small businesses. Most will fail. A few will go on to become somewhat bigger. One out of a million becomes a Ralph Lauren empire. What's the difference really between a small business and a startup?
- kerng 8y ago
  Startup just sounds cooler, that's why - in reality there isn't a difference. A single parent starting up a hair salon or restaurant is also a startup, it's just a new business being set in motion.
- mikenyc 8y ago
  http://www.paulgraham.com/growth.html http://www.paulgraham.com/growth.html
  - tchaffee 8y ago

MicahKV 8y ago

I've been reading about VC and all it entails for years now, and it always leaves me with a sketchy feeling. Pouring so much time and effort into chasing capital, and then giving up so much ownership and being on the hook for big returns once it's finally attained... seems like a sure way to suck the soul out of any business. Not saying VC doesn't have a place in the world, but I get the sense that a lot of founders pursue VC just because that's what startups are "supposed" to do.

Stryder 8y ago
The nature of VC is to build portfolios. The success and failures of individual companies within that portfolio matter very little- what matters a lot more is whether the lessons learned and knowledge/IP generated can spill over to other portfolio companies to eventually produce winner(s) somewhere. The success of the portfolio is what matters to the firm, and the returns are what matter to the LPs. It is what it is, so entrepreneurs should use it for what it is. The hype over the past decade has been ridiculous.

dcole2929 8y ago

One of the things I really like about this article is the story of Tuft & Needle. One of the biggest reasons (imo) why there are relatively few minority founders is because of the lack of access to inter-generational wealth. If you are poor or come from a poor background it's hard to build the requisite capital necessary from a friends and family round because often times they just don't have it. Now as a founder you find a way, but still it's nice seeing a success story of a company that started with only $6k. That's money that most engineers could save up relatively easily.

cannabisceo 8y ago

If you're a consumer brand you can turn to factoring and vendor financing to run your business. There's more options open to you.

aero- 8y ago

This headline is misleading. Native raised venture capital, it wasn't disclosed but there's plenty of PR surrounding it. Tuft and Needle was started by engineers that had a good bit of personal cash saved in the bank, then later borrowed $500,000. MVNT raised Money. It's not like these companies didn't raise a bunch of money, they just didn't use VC $$ supposedly. The common denominator here is the direct to consumer model with the use of growth hacking via social media campaigns and the rise of such social media platforms. I.E. Make product that people want to buy and market it efficiently on social channels.

bsder 8y ago
I don't really consider these companies to be "startups" because they don't have to solve some technical problem. These kinds of consumer "cosmetics" companies have always run like this. They are about marketing, not product. If you want an education, go to the MD&M West show and sit on the parking shuttle bus and listen. There are a zillion of these kinds of companies all hawking almost exactly the same products looking for some marketing and sales "edge". None of them are solving "we're actually technically better". Kudos to these companies for finding that marketing and sales edge, but I don't really consider that to be a "startup".
- jtmarino 8y ago
  Not all disruption is purely technical. In the mattress industry the disruption is more around process. Direct to consumer, service, product iteration with direct customer feedback, more vertical. There are technical innovations (foam chemistry) but that's not something that I would consider disruptive. Historically, mattress manufacturers (the big brands) sell direct to retailers with little to no customer feedback or service. The stores resell (middlemen adding to the customer cost) with little to no customer feedback passed back to the brands. The supply chain was very difficult to break into because it was guarded from new direct to consumer entrants.
  - aero- 8y ago
    I read an article recently on the behind the scenes lawsuits with these paid bloggers in the mattress review industry. https://www.fastcompany.com/3065928/sleepopolis-casper-bloggers-lawsuits-underside-of-the-mattress-wars https://www.fastcompany.com/3065928/sleepopolis-casper-blogg... It seems like these guys generated a tremendous amount of money for themselves and orders for the businesses based on which company they gave the OK to. You guys seemed to stay out all that, which I really respect, but it looked like some competitors really went to lengths to get that "edge" in this product category.

ikeboy 8y ago

I met the native guy recently at a conference. He's seriously one of the most impressive stories I've ever heard - 2 years, 1 product, only sold on their site, 100M exit, vast majority going to him. He talked about testing a ton of variations (over 100 overall) of their product by selling batches of a couple thousand and tracking return rate, reviews, and reorder rate. Get the best product after extensive customer testing, get the best ads after extensive a/b ad testing, scale up profitable ad spend.

epynonymous 8y ago

refreshing article, i have what i consider to be a potential small business, it's not as attractive i'd assume to investors as most things these days that have something to do with blockchain, machine-learning, self-driving cars, or billion dollar valuations, but i think there's potential for a very nice business that could potentially evolve into a lifestyle business and it doesn't need hordes of employees, i've been doing everything from development of backend services, platform, and front end mobile app, to marketing, testing, product management all on my own. obviously having a couple more people to help with sales and development would speed things up, but i don't need a 50 person team at the moment. having read this article and buffer.com's recent buyout of investors, it shows that there are potential alternate routes to success. i can understand the nature owner not feeling good in the beginning when everyone around him's talking about billion dollar valuations and series a, b, c funding, but it seems he sold for several hundred million which seems like sweet vindication. obviously most small businesses fail and eventually need some sort of funding whether from a small business loan or bootstrapping, etc, but it's manageable. https://madsportslab.com https://madsportslab.com