The post resulted in a Fortune article (https://fortune.com/2014/01/22/meet-the-warby-parker-of-matt...) which helped to catalyze hockey stick growth and triggered a wave of vc money into the industry, we turned the interest down. The vc money resulted in new competitors for us (Casper/Purple/+200 others as barriers fell). This collectively caused massive change.
We grew to 250mm arr before we merged with serta simmons in 2018.. to disrupt within their brand portfolio. We’ve been working on their brands to mimic our model.
Our growth was 100% bootstrapped with no more than $6k. My co-founder and I seriously attribute our show HN as one of the reasons we were able to build our company the way we did and for spurring interest in our competitors to enter the market. The competition also accelerated our growth without the need of funding, their VC money fueled advertising raising awareness.
Anyways, one data point for you. Super grateful for this community.
Heard from HN. Saved up a ton of money in college for one. Miss how good the original beds used to be. We went with another 3 years after our first in 2013 and it was horrible in comparison. Used to recommend the brand to everyone until that point. Sounds like you made a great exit however
If you’d email me (jt@tn), I’d love to send you our newest iteration. We’ve progressively improved customer sat since founding so I wonder if this was potentially a defect. There were a few seasons where our manufacturing struggled with capacity and quality suffered for a while. I’m hoping that’s what happened here. Pls email me, would love to try one more time if you are open to it.
JT from Tuft & Needle here. I met with Andrea and the team last year. They are solid. The big difference with this tech is that it can actually impact the way you sleep as opposed to just reporting data points.
When you sleep badly you usually know it in the morning. A wristband telling me isn’t that useful. A tool that actually helps you fall asleep and stay asleep provides significantly more value.
We added a btc option at Tuft & Needle last November and up until about Feb was about 5% of our sales. btc purchases have been steadily dropping and are now around .01%
We make mattresses. Every member on our team sleeps on them each night. It's absolutely critical for us to have this first hand experience, especially as our team becomes larger with varying body types and personal preferences.
We iterate on our own internal feedback in addition to our customer's.
We began accepting bitcoin last month and aren't converting all of our bitcoin to dollars. We have several employees who accept their pay in bitcoin.
Taking things a bit further, we are optimistic about bitcoin as a payment form with our suppliers as the volatility stabilises. As an example, one of our suppliers is Belgium based and we'd be able to save on the currency exchange with those payments. We've discussed it and they didn't turn their nose up to the idea.
That is certainly an interesting datapoint, though paying your employees in bitcoin... I'm not sure how I feel about that in ethical terms. What would you as an employer do if you paid someone on Friday and on Monday that paycheck only bought half as much bread as it did on Friday? Also doesn't it make income/FICA tax kind of a pain?
The employer as paternal unit paradigm needs to die. If the employee wants to take a risk they are an adult and should judge the merits of the scheme for themselves.
That's a good question. We don't exactly view it as an ethical issue. Anyone on the team can opt-in to whatever percentage of their compensation they'd like to be paid in bitcoin. Currently no one is taking 100%.
We do educate how the currency functions and the risks there may be.
There are definitely a lot of risks involved in accepting Bitcoins as a salary. Anyone doing it should fully research the currency and be aware of the risks before ever accepting such an option.
You're comparing us to a mass produced cotton futon which has a radically different cost structure to manufacture than a foam mattress. In fact, the actual cost to manufacture that linked product, based on pricing we have for those, is around $30 to $55 for a queen. That would put that product somewhere around 500% markup at the retail price. There is also a big difference in the quality of material, as an example, if you cut open that futon--they remove the zippers--you'll see it's filled with scraps of fabric instead of new cotton batting. They do that to cut product costs further to keep the margins high. Those are being produced by Wolf Corp in Indiana who is a Serta partner. Just the quilted cover for our twin size costs more than that to produce.
Organic cotton costs roughly double. So if you buy knitted fabric at $6 a yard, organic fabric will cost around $10-12 if it's a more than 50% of the composition. So the pricing difference is drastically more than you mentioned. You typically use 4-5 yards to make a mattress cover so you're talking $25 increasing to $50 just for the cover fabric. For a futon like you linked, they're using a low oz woven twill that costs less than $2 a yard typically totalling about $8 for the cover.
The poly foam we designed currently has a density of about 2 lbs. Which is on the high end for foam quality. You can learn a lot more about densities on the Mattress Underground. I'm not willing to disclose ILD, compression modulus or formula recipes because those are currently trade secrets and we honestly don't see a good reason to disclose them at this time. Not to mention that the only people we've found that are interested in those details are competitors.
You are more than free to contact us and ask us questions. This thread is starting to get old so you might get a faster response if you email me direct jt at tuftandneedle.
I would respectfully disagree that the cost to mfg. a mattress is drastically different.
Your pricing is completely off. You can buy organic cotton fabric for as low as $6 that is 100% organic cotton certified by GOTS and you buy can knit fabrics for $12. It isn't that simple of a comparison. If you were in manufacturing, you would know, but it is easier to come up with a marketing gimmick. Tuft and Needle buys from a manufacturer and resells it just like Sit 'n Sleep, Mattress Firm, Sleepy's, etc.
Why do you say “about 2 pounds” as the density? This sounds like cop out. You are probably using 1.8 and some 2 pound. Be open and honest so people can make an educated buying decision.
You don't agree that those are good comps. How about these?
A queen Ikea is $329 for 2.2 pound foam and a ½” thicker. (http://www.ikea.com/us/en/catalog/products/00139813/) Where Tuft and Needle is $399 for a supposedly 2 pound foam. Surprisingly, most IKEA mattresses are made in the US so don’t give the made in China routine on this.
Why is Tuft and Needle $100 more than the name brands which are made in the USA, too? Don’t give me the density because like Sealy and Serta, Tuft and Needle won’t disclose density. For sake of argument, let’s say Sealy uses a 1.2 pound and Tuft and Needle uses 2 pound foam. There is 200 board feet in a queen mattress and the cost per board foot between 1.2 and 2 pound is 25 cents. The added cost would be $50 in raw material.
This is untrue; “Tuft & Needle was founded to offer boutique-quality beds at a fraction of the cost. You shouldn't have to overpay for a good night's sleep.” Tuft and Needle is nowhere close to a boutique bed.
Finally, prove to me that mattress stores markup the mattresses 500%. If you look at Mattress Firm's 10K Report, you will see that there GM is nowhere near that. In 2012, they had sales of $1,007,337,000 with a COGS of 614,572,000. That is a 64% markup. No, sales and marketing are not included in this. They spent 245,555,000 on sales and marketing. Tuft and Needle needs to get the facts straight.
Kindmatt, thanks for the reply. There are many points here and I'll do my best to address your concerns below.
> Your pricing is completely off. You can buy organic cotton fabric for as low as $6 that is 100% organic cotton certified by GOTS and you buy can knit fabrics for $12.
I wouldn't disagree with you about being able to get it for $6 or even for nearly free when a fabric supplier has material they are getting rid of. There are varying attributes that makeup a cost other than just raw material. The numbers I was using was based on averages found in research we collected from suppliers' prices within the USA.
> Tuft and Needle buys from a manufacturer and resells it just like Sit 'n Sleep, Mattress Firm, Sleepy's, etc.
We are the manufacturer of the mattress, so the comparison to other resellers is quite misleading. With that being said, we certainly have partnered with 3rd party suppliers for the individual ingredients. As an example, we don't have our own foam pouring machines or fabric knitting machines yet.
> Why do you say “about 2 pounds” as the density? This sounds like cop out. You are probably using 1.8 and some 2 pound. Be open and honest so people can make an educated buying decision.
I'm being honest with you when stating our foam is "about 2lbs." The reason I say "about" is because foam in general has a slight variance, it's never exact. It's not abnormal for foam to be .1% more or less dense but, on average, ours is 2lbs. We don't hide that fact from competitors. For skeptics we encourage them to purchase and test the foam with lab equipment.
> You don't agree that those are good comps. How about these? A queen Ikea is $329 for 2.2 pound foam and a ½” thicker. (http://www.ikea.com/us/en/catalog/products/00139813/) Where Tuft and Needle is $399 for a supposedly 2 pound foam. Surprisingly, most IKEA mattresses are made in the US so don’t give the made in China routine on this.
That is definitely a better comparison. Our intention is not to undercut Ikea prices and even if we tried it probably would not be possible for a while. They are a mega billion dollar company and can leverage their economy of scale. We respect them for their pricing and what we offer our customers is a different experience than simply price alone.
> Serta at Sleepy's is $299.99. Even if they were using a lower density, how could they be marking this 1,000% as Tuft and Needle states. Sealy has one that is 5 ¾” thick for $299.99 at Sleepy’s
The markup certainly depends on which product you're talking about and which retailer is selling it. If that specific Serta mattress is actually priced in a more fair manner, that would be great. There are also other smaller companies taking a similar approach as we are, which we are really excited to see. Mattress Underground has done a pretty good job of discussing companies like this.
> Why is Tuft and Needle $100 more than the name brands which are made in the USA, too? Don’t give me the density because like Sealy and Serta, Tuft and Needle won’t disclose density. For sake of argument, let’s say Sealy uses a 1.2 pound and Tuft and Needle uses 2 pound foam. There is 200 board feet in a queen mattress and the cost per board foot between 1.2 and 2 pound is 25 cents. The added cost would be $50 in raw material.
We do disclose our density but will not disclose the other specs you're wanting because those are our secret sauce. You're giving some examples of foam board foot costs but to be fair, not all foam is priced on its density. A 1.2 pound foam, as you say, may cost 25 cents but if you pour with a different ILD, compression modulas, different chemical makeup, dye, or other attributes of many, it will certainly affect the cost. It isn't black and white. This is why you find quite a few foam companies inventing new mixtures and formulas and charging different amounts for the same density. Our foam makeup is unique.
> This is untrue; “Tuft & Needle was founded to offer boutique-quality beds at a fraction of the cost. You shouldn't have to overpay for a good night's sleep.” Tuft and Needle is nowhere close to a boutique bed.
Boutique is certainly a subjective term. For some clarity as to why we use that word, we're a small team and we're offering something, that we believe, is specialised.
> Finally, prove to me that mattress stores markup the mattresses 500%. If you look at Mattress Firm's 10K Report, you will see that there GM is nowhere near that. In 2012, they had sales of $1,007,337,000 with a COGS of 614,572,000. That is a 64% markup. No, sales and marketing are not included in this. They spent 245,555,000 on sales and marketing. Tuft and Needle needs to get the facts straight.
The 500% statement I made above was based on the product you linked. I explained how I arrived at that number above. But as far as Mattress Firm, we never singled that company out or have ever looked into them. I don't know what their markup is but it's certainly an interesting question.
I see you just made a fresh HN account and are not exposing your identity in the profile. If you'd like to have a deeper conversation it'd be great to jump on a call or meet face to face if you'd like. I'd even be willing to show you around our facility if you're in the area.
I’m new to HN, but I don’t think that this takes away from the points that I’m making. I think that this conversation is best held in a public forum so people can know the truth rather than sweeping it under the rug.
It sounds like you are using the top end of the tolerance of the foam when you say “about.’ Everyone else in the industry uses the target density. If you want to be totally transparent, give the range of the density like I’ve seen when people talk about ILD or give the target density like everyone else so that people can fairly compare Tuft and Needle’s mattress. Using the word “about” makes you sound like you are trying to be sneaky.
Even though IKEA is a huge multinational company, they don’t manufacture the products. A true mattress manufacturer would be able to overcome their volume discounts and offer a product for the same price as or less than IKEA. The Mattress Underground has a list of true manufacturers who I’m sure can easily produce something for less than or at the same price as IKEA. Fox, Flexus, and Buis are just a few of examples of the real deal. These are true manufacturers!
You are not very knowledgeable in the mattress industry. Most manufacturers don’t own knitting machines and equipment to pour foam. The three largest manufacturers in the US don’t even own them. Tempurpedic buys foam from another manufacturer with the exception of their memory foam. Sealy, Serta, and Simmons buy their fabric from a weaver and foam from other manufacturers. Mattress manufacturers quilt, cut, sew, and assemble the mattress.
Technically you are a contract manufacturer. You’ve found a factory in California to make the mattress for you. Just like Apple doesn’t manufacture the IPhone, you don’t make the mattress. Matt Firm, Sit n Sleep, Sleepy’s and others do the same thing for their private label. Tuft and Needle doesn’t lease or own a manufacturer facility nor do they own a quilting machine, sewing machines, tape edge machine, etc. You are very slick. To prove my point, if you are truly a manufacturer, does Tuft and Needle own or lease a factory where it only produces product for itself and their customers? And, do you have the equipment, like sewing machines, on your balance sheet that you depreciate on a yearly basis? Just be honest and try not to twist the truth. This is problem with the mattress industry.
On Tuft and Needle’s website, it states the typically markup is 1,000%. The reason that I gave the Matt Firm example is they are largest mattress retailer in the US and the only publicly traded one so we absolutely know their markup. All the other top twenty mattress retailers operate in this manner. That type of markup is atypical. I’d bet you’d be hard press to find one with a 1,000% markup that isn’t based on some myth. Consumer Reports, http://www.consumerreports.org/cro/magazine-archive/2010/may..., even mentions that the average gross margin is around 30 to 40% which at most is a 67% markup. On the high end, which Tuft and Needle’s is not based on the comparable from IKEA and others, the markup is 100%. If you were using memory foam or latex, your argument may be more valid, but even a high density foam mattress is considered a low end mattress.
Show me one overpriced 5” foam mattress? If you are offering factory direct prices, I should be able to find one similar to Tuft and Needle for $800 in a queen given a 100% markup and that Tuft and Needle is selling the mattress to us at the same price that a manufacturer sells it to a retailer. Please don’t tell me that you sell at lower margins than retailers pay for a mattress from the big brands, who have enormous buying power that would offset your lower margins as you have previous stated in the IKEA example. At Sears, you can get a 12” gel memory foam bed on sale for $594 which is significantly higher quality than a 5” high density foam mattress. http://www.sears.com/sealy-fergus-falls-ti2-ii-ultra-firm-qu... I could go on with examples proving my point.
Tuft and Needle may offer a different shopping experience, but I think that it is mistruth to talk about the money that customer saves when he/she can buy product of similar quality and durability at a local big chain mattress retailer.
You can be a good company selling a mattress made for you. Just don’t be dishonest and twist the truth like the rest of your brethren in your industry. It is a disservice to the true small independent manufacturers.
Net Promoter can be highly flawed due to the following:
- It's a composite index and so the margin of error (MoE) for your promoters and seperately for detractors combine to create a NPS MoE which, unless your N was sizable, could be quite large
- Due to the previous point, it's hard to trend NPS; if your MoE is +/- 10 points in two seperate periods of time, unless you had a HUGE swing in your NPS score (which is another problem w/ small N's when calculating NPS) its hard to tell if your NPS score (really) went up or down
- I've seen many cases where the NPS score has "gone up" period over period, but the number of promoters actually decreased; did you look at the data deep enough to make sure that didn't happen?
The post resulted in a Fortune article (https://fortune.com/2014/01/22/meet-the-warby-parker-of-matt...) which helped to catalyze hockey stick growth and triggered a wave of vc money into the industry, we turned the interest down. The vc money resulted in new competitors for us (Casper/Purple/+200 others as barriers fell). This collectively caused massive change.
We grew to 250mm arr before we merged with serta simmons in 2018.. to disrupt within their brand portfolio. We’ve been working on their brands to mimic our model.
Our growth was 100% bootstrapped with no more than $6k. My co-founder and I seriously attribute our show HN as one of the reasons we were able to build our company the way we did and for spurring interest in our competitors to enter the market. The competition also accelerated our growth without the need of funding, their VC money fueled advertising raising awareness.
Anyways, one data point for you. Super grateful for this community.