June 2017  |  TAGS: , , ,
Overnight Success

Overnight Success

From smart pillows to “snore stoppers,” the path to a good night’s sleep is increasingly connected and high-tech. Surprisingly, though, some of the biggest success stories are taking a fresh look at the basics — and disrupting the sleep industry every step of the way.

$411 billion

How much the U.S. loses in productivity each year due to insufficient sleep

Source: RAND Europe, 2016

It took nothing short of a “sleep deprivation crisis” for Huffington Post founder and editor in chief Arianna Huffington to step down from her website last year. Her new pursuit — spreading the gospel of health and wellness, including sleep — ramped up with the publication of The Sleep Revolution: Transforming Your Life, One Night at a Time, an instant best-seller. The appeal of sleep has never been more apparent or alarming: A 2016 study by RAND Europe — the first to look at the economic impact of sleep deprivation — found that every year, the U.S. loses $411 billion and 1.23 million working days to insufficient sleep. And someone who averages less than six hours of sleep per night has a 10 percent higher mortality risk than someone who sleeps 7–9 hours.

The best foundation for restful sleep, many sleep experts say, is a comfortable mattress. Mattresses from FedEx customer Tuft & Needle aren’t full of high-tech bells and whistles (see sidebar), but they’re disrupting the mattress marketplace with radical transparency about production, cost and shipping. College friends John-Thomas (JT) Marino and Daehee Park started the company in 2012 with $6,000 in savings following Silicon Valley stints — Marino helping start-ups build customer experiences at mobile development consultant Hashrocket, Park as a consultant at marketing technology and services company Axciom. Since then, the Phoenix-based company has produced month-over-month profitability nearly every month since — reaching more than $100 million in revenue last year. It manufactures all of its mattresses in the U.S., earns No. 1 ratings from Amazon customers and Consumer Reports, and donates all customer returns directly to charity. Access sat down with Park for an inside look at the disrupter.

Tuft & Needle co-foundersYour background has nothing to do with mattresses. What drove you to this industry?

We started our company knowing nothing more about mattresses than the average person walking into a store. All we knew was that mattress shopping was terrible — that everyone dreads it. You walk into showrooms of over-complicated products layered with dozens of fancy-sounding ingredients, staffed by salespeople who sound like used-car salesmen, offering tricky promotions and high-pressure tactics. There’s no price transparency and no way to comparison shop. We knew there had to be a better way.

“We wanted to take what we had learned in software and high-tech, and apply that to an old, traditional industry … that impacted everyone in society.”

Daehee Park, Co-Founder, Tuft & Needle, shown at the left with fellow Co-Founder JT Marino

For decades, the mattress industry has been completely complacent with the status quo and really has not felt a need to change, sadly enough. This is an $18 billion industry just in the U.S., and participating in the business was very lucrative — as long as people didn’t question deeper, that is. We wanted to take what we had learned in software and high-tech, and apply that to an old, traditional industry just like this that impacted everyone in society. At the time, we were burned out in Silicon Valley on developing “killer apps” that sounded cool but weren’t solving real problems. Related to that, we were jaded by seeing millions of dollars in investor money literally being thrown at creating growth for growth’s sake. We wanted to build a business that could grow organically with its own profits because it would create value for the people we would serve.

So what’s the story behind the name?

The Tuft & Needle brand name originated from our first foray into mattress manufacturing. After asking for help from a friend of ours who is an experienced furniture craftswoman, the very first mattress we learned how to make was the traditional way. The mattress is stuffed with cotton and wool and then “tufted” with a long needle through both sides, which prevents the material from shifting around. Although we’ve long since iterated from more traditional materials and methods like that, our brand embodies the traditional ethos of how mattresses used to be made.

people unpackaging a Tuft & Needle mattressTuft & Needle has also become synonymous with a mattress that comes in a box. How did you arrive at compressing your mattresses for easier shipping?

We didn’t invent the “mattress in a box” category — that method of packaging had been around for several years before we started. Compressing our mattress into a small box — even up to a California king size — helped us ship quickly and cost-effectively to customers nationwide. As we’ve taken this concept mainstream, it’s been incredible for customers receiving an attractive white box with handles on the side, and being able to set the bed up within minutes on their own.

Tell us more about how you’ve iterated the design and engineering to make your mattresses different from others. And how did that approach help fuel your success?

We pioneered the concept of a single mattress designed to work for everyone. Coming from our background in tech, we’ve developed the mattress like we do software.  Beginning with solving the pains based on first principles and challenging all assumptions, we’ve constantly iterated on the product based on real-time customer feedback. Using this approach, we’ve established ourselves as an industry leader, ranked as the No. 1 highest-rated mattress  on Amazon and also reviewed as the No. 1 “Best Buy” in Consumer Reports. (Editor’s note: Prices range from $400 for a twin mattress to $900 for a California king.)

You describe this single mattress as designed to work for everyone. How would you describe your typical customer? You’d tend to think your approach appeals mostly to millennials.

This is an interesting one, especially coming from software, where you have to home in on a target user and cater the design and the messaging to them. But for mattresses, when we think we understand a very specific customer, the types just continue broadening. The growth we’ve been experiencing has come because our appeal is not to a specific audience or segment demographically speaking. It’s more psychologically to the consumer who is fed up with the existing establishment of the way things are.

A lot of people think we’re just a millennial company, and I think some other brands in our space really cater their messaging toward that. But we try to have universal appeal. When you look at our marketing and our photography and our website, we’re embracing the general population of the U.S. We’ve been very mindful of that with our employees, too. Obviously when we first started, we hired friends. It started with JT’s and my hiring our brothers. But we’ve really tried to diversify our employee base to represent our actual customers — and that’s a wide range. It’s important for us to be a very welcoming brand, so we don’t want to fall into a trap of being an overly cool, hip brand that’s only for young people. That might appeal to a small subset of our customers, but our goal is to grow this company over the long term and become a household brand name in the mattress category. And the way we’re going to do that is by appealing to the masses.

a man and a woman sleeping on a Tuft & Needle mattressWell, you started to see broad appeal pretty quickly after launching your first mattresses. How did it feel to get your first online customer comments and then to see the reviews start to come in?

Delivering a physical, tangible experience to customers was a whole new uplifting feeling and a sense of a more intimate connection with the end user, as opposed to a more disconnected virtual experience you have when you’re working on a software app. Our product will stay in a customer’s home for several years to come, and they will interact with it for more than a third of their day. With that as context, it was very fulfilling when we saw the first reviews roll in and social media chatter praising our product and customer service.

Early on, you relied heavily on word of mouth and your customers sharing their thoughts. Now you have a marketing campaign with TV spots, billboards and magazine ads in several major cities. Tell us about that.

Although we have more of a marketing budget now to get the word out, this campaign is more educational. It’s what we call “The Truth” and it lets consumers know how this industry works. So, even if you don’t buy from us, we thought it was important to peek behind the curtain to see what’s going on with a lot of mattress companies so that you can make an informed decision and at least know what you’re buying into if you’re choosing to go the more traditional route. But it applies across industries — this is just one example. It’s all about creating a healthy skepticism among consumers so that they can question what they’re buying and dig a little deeper to make sure they’re buying from a company they can really trust.

The idea of healthy skepticism is really interesting. What other industries do you think this applies to?

When you go to a typical mattress showroom, we’ve heard people compare it to buying a car or going into a jewelry store — places where you’re oftentimes dealing with a salesperson whose incentive is trying to sell you the highest-price product because they’re commission-based. And because they’re only a once-in-a-lifetime or once-in-a-while purchases and they know you’re not going to come back for a long time. Traditional mattress salespeople are not incentivized to create this relationship with you where you develop trust.

Tuft & Needle offices

Tuft & Needle mattress on displayTuft & Needle showrooms in Phoenix (top) and Scottsdale, Arizona (above)

Speaking of stores, it looks like you’re giving it a try — with spaces, not surprisingly, that aren’t at all like your typical mattress showroom. Describe what you’re after.

When we were thinking about brick-and-mortar retail, what we were trying to improve upon was not just the status quo in the mattress industry because the bar is set very low. You’re talking about showrooms in strip malls with almost no buildout — all they do is start putting up posters on the windows and laying out a few mattresses, and they don’t have to really hire anybody except for a person who’s being paid minimum wage and then has to work for the commission. So, we wanted to completely rethink that and actually look at the bigger picture: If we’re looking at brick-and-mortar retail in general, what’s our contribution to that — how can we raise the bar on that?

That’s where our thinking started, and that’s also why, when going down this path or even with our company in general, we haven’t hired anyone from the mattress industry. It’s to keep our minds fresh and not introduce too many assumptions.

One of the values of our company is having a student mindset and approaching everything with humility, and a lot of that is through not having baggage from the industry. I think that’s worked out well for us, because when it came to our stores and our design and how we’re thinking about that experience, it’s completely different than when you walk into a mattress showroom. For our customers, people are putting it like when they walk into an Apple Store and they’re wowed by that — it’s just different. So, let’s just take San Francisco as an example: We have a built-in coffee bar and a fully trained barista there, and it’s very simple, with nothing plastering the walls. Right now, we’re trying to figure out whether a guided experience or a self-serve model is better, so depending on when you come in, it might be different. We treat the store like a product — there are different versions we’re trying to iterate. It’s still a work in progress. What’s clear is there’s demand for it and it’s adding to our brand experience — it’s a physical manifestation of our brand. It gives us a chance to physically interact with our customers, whereas e-commerce can be cold and feel disconnected no matter how great your design is. So, we like that aspect and we’re very optimistic about it.

How does that innovative spirit take shape at your headquarters and the way you run the business?

The spirit and culture of our company originates from the people we hire. The brand is us, and our company values represent our collective personal values that we live by, not just aspire to. Autonomy is very important to us — we look for self-starters who don’t need to be and don’t want to be micro-managed. We’re at 150 employees now and growing quickly. Although we’ve organically added structure and hierarchy as necessary, we never want to lose our flat culture of collaboration, accessibility and energy.

COMMENTS

  1. Teresa McDaniel - July 15, 2017

    I would like more information about each product

    Reply »

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