The next story in our bootstrapped heroes series is just as inspiring as the last. We’re excited to get started and share more about the entrepreneurial journey of yet another successful brand! Are you too? The online mattress is the hottest e-commerce category these days, and here’s yet another one delivering venture-scale growth WITHOUT venture capital. In our bootstrapped stories edition this month, we’ll show how Tuft & Needle, a Phoenix-based company, pioneered the disruption of the mattress industry. Read along!
A Belief, A $6,000 Investment, And A 170+ Million Revenue: The Story of Tuft & Needle
John-Thomas Marino and Daehee Park launched Tuft & Needle in 2012 with $6,000 of their personal savings and, later, a $500,000 loan.
The idea for Tuft and Needle came from a bad mattress shopping experience. Marino had just gotten married and gone shopping for a mattress. The mattress cost him $3,500, and when he decided he didn’t like it, there was a no-return policy. He ended up feeling like he had wasted a lot of money. In summary, his shopping experience was terrible, and he decided they should go into this business, to make the mattress-buying experience better for everyone.
He, then, told his experience to his friend and co-founder Park, and Park empathized. This is when both decided to create a product with honest pricing. So, T&N started simply as a problem Marino and Park wanted to fix for themselves.
They listed out all the things wrong within the mattress industry and one thing that was prominent was overpricing. A mattress was made for $300 on average and retailers had a huge markup. Also, they realized that there were commission-based sales models that forced salesmen to sell mattresses to even those customers who didn’t want it (pushy), and traditional store owners’ greed was unfair.
However, both Marino and Park were quite focused on using their own savings and not funding for launching their business. So, they decided to invest $6,000 from their personal savings into the business. Initially, their strategy was to test the market by creating a one-page website and running Google Ads. To their surprise, in 15 minutes, people started booking T&N mattresses and they knew it was a viable business.
To further build their business, both Marino and Park rented a car and drove to each mattress factory around to negotiate with some manufacturers to cut down their minimum quota cost and give them credit. While they did get a loan from the bank of $500,000, they shifted from Silicon Valley to Phoenix in order to save costs.
The result: In their first month in 2012, Tuft & Needle had a profitable business. In 2013, they did over $1 million in sales. In 2014, they did just about $9 million in sales. In 2015, the sales crossed the $40 million mark. In 2016, they broke over $100 million. And finally, in 2021, the revenue was $170.0 Million.
Here are a few lessons all entrepreneurs can learn from Tuft and Needle:
Lessons D2C brands can learn from Tuft and Needle
Offer a solution that solves a real-life problem, genuinely
Solve a problem for someone, and you’ll create a bond. This is what Tuft and Needle did. In terms of industry differentiation, Tuft and Needle offered a one-model bed that was priced between $300-$700 which is lower than the competitor’s price range of $1,000-$5,000. Also, they provide a 100-nights sleep refund policy with 10 years of warranty. This gave the customers a quality product with a better price and convenience.
Video is the most powerful way that helps you prove your point. Tuft and Needle showed the stark difference between their authentic approach and the other traditional mattress industry’s gimmicks via videos. They leveraged videos to get their messages across and relate to people as “almost everyone has had that shopping experience.” They spoke about how their mattresses were of high quality, better than the competitors, and affordable for everyone.
They started on a budget of just $50 to $100 a day, and now dedicate half of our Google advertising to YouTube – it gets results for them! At present, T&N has 6.59K subscribers on their YouTube channel – https://www.youtube.com/c/Tuftandneedle.
Create persuasive content
Always be honest with your audience and deliver on promises. Share content around facts and case studies that help you build trust amongst your target audience. See how Tuft and Needle effectively use ethical appeals in its online content:
On the site’s home page, the headline talks about its Mint Mattress which is one of their best mattresses. If you scroll down, you will find a section saying that “US News and World Report calls the Mint Mattress #1 in Best Mattresses of 2021” Also, the brand displays the discount of “Up to $500” and free shipping options right at the top to attract its audience.
Abandon the traditional paradigm
Customers love shopping online due to the convenience of getting everything they wish at home. Therefore, all brands should think of an omnichannel framework to sell their products online – be it selling via a website or through Amazon. However, online sales of large or bulky products are constrained by the requirements of logistics.
But Tuft & Needle thought out of the box (or rather of inside the box) and designed a mattress that could fit inside a box, making shipping easier. This helped them meet the supply chain requirements and change paradigms for both the product and the buyer experience. This saved the buyer from the hassle of going to the furniture shop and bearing the cost to bring the mattresses home all by themselves.
While this is something that every brand should focus on, Tuft and Needle goes the extra mile to make sure that their customers are satisfied. The brand relies heavily on customer reviews and putting what dollars they make into product improvement. Here’s a snapshot of their customer reviews on Amazon, with a rating of 4.4, showcasing that people genuinely love their product:
Having such reviews is important on Amazon as more than 85% of customers check at least 10 reviews before making a buying decision. And there has to be a proper strategy in place to plan your customer feedback journey, just like T&N. If you want some tips, here is a blog in which we have explained everything – right from asking for reviews from your first customers to managing the negative customer reviews on Amazon.
Furthermore, they have a 100-night trial policy that states that if a buyer is not completely satisfied—for any reason— he/she may return it for a full refund. It further states that the returned mattress will likely be donated to charity.
So, this was the story of Tuft and Needle – a brand that said “no” to investors and built a 150+ Million revenue business with their savings. We hope you enjoyed reading it as much as we did writing about it! While this story was truly inspiring, we do understand every business is different, and some may need the required capital for growing.
However, make sure that you do not dilute your equity and lose control over your company for funding. If you need funds to grow your business, your search ends here. We, at Velocity, are India’s largest revenue-based financier and offer growth capital of up to Rs 3 crore to D2C and e-commerce brands. You can get instant funds and make the repayments as your revenue grows. For further insights into revenue-based finance and to explore the advantages of RBF for your company, simply follow this link. To get instant funds for your business, apply here!