Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses.
Today’s guest is an entrepreneur who was I feel a little hated by Mark Cuban. In fact, the sharks on “Shark Tank,” especially, did not seem to like him. I think one of them said that he was the worst entrepreneur he ever met or the person who rubbed her the worst. It was a pretty aggressive “Shark Tank.” I saw it.
His name is Mark Aramli and he’s the creator and founder of BedJet. Here’s what BedJet does. Do you ever go to bed and you feel like, “It’s still too cold?” You want to feel nice and toasty, you don’t want to bundle up, wear tons of sweaters. You just want to feel nice and toasty. Well, his BedJet product will allow you to make your side of the bed really warm.
Now, if you’re sleeping next to someone who doesn’t want it nice and toasty and actually wants it a little cooler, BedJet will allow that person to also cool their side of the bed. So whatever you want, you can do, warm, cold and make yourself comfortable so you can have a good night’s rest. That is what BedJet is doing. We’re going to find out how the business did, after and frankly even before “Shark Tank.”
This interview is sponsored by two great companies. The first will help you hire your next incredible developer. It’s called Toptal. The second will help you close more sales. It’s called Pipedrive. I’ll tell you more about both of those later. Mark, welcome.
Mark: Thanks for having me, Andrew.
Andrew: Do you feel like you were hated by the people on “Shark Tank?”
Mark: Well, they definitely didn’t like me. They didn’t like my product. They managed to insult my mother along the way, although the editors cut that part out. It was as hostile a “Shark Tank” segment as you’ve seen that has been out there, probably the worst of season six, which I was part of.
Andrew: I saw it. And Lori Greiner — am I pronouncing her name right, Greiner?
Andrew: She tweeted out, “This is the first time I was ever really pissed off by an entrepreneur in the tank.”
Andrew: Then she tagged it #BadToBeRude. The problem was they all thought that $500 for this device is too expensive, right? They asked you how much it cost you to make it. You said $98. So why sell it for five times as much as it costs you?
Mark: So when we went on “Shark Tank,” the product wasn’t yet in production. We hadn’t tested the market with it other than Kickstarter. We hadn’t gotten any feedback from sales to see the right price point. We also didn’t quite know what our true production costs were going to be. It was all guesswork. Really, the $499 was just a starting point for us based off other products in the market that were trying to do bed climate control or bed cooling and heating.
Andrew: You were basically, even though you came across as a guy who had a sharp point of view, you were basically figuring it out at the time. That’s why some of the questions you answered felt a little evasive, your responses felt evasive. It’s because you just didn’t know. You were still early.
Mark: We were. I think one of the reasons why they went so negative so fast wasn’t just the price point. I think it’s that we didn’t have any sales. We didn’t have any production. We were still prototype stage. Those folks over there, they want to see revenue. They want to see traction. They want to see how it’s going to go. Ultimately, when we got into production, we found out our costs are higher, significantly higher than we hoped, but we managed to sell the product at a much lower price. You’re seeing BedJet now being sold as low as even $299 versus that $499 price point.
Andrew: That’s where you get one climate. It’s not that you and your spouse get it.
Mark: Yeah, for the base model. But what we found out, they were actually dead wrong. Our average customer purchase is still right around that $499 spot. So as we’ve lowered the price of this really neat climate control product for your bed, what we’ve found was people just bought more. They expanded the scope of their system from the basic model to a more sophisticated model or more features.
Andrew: There’s no way to add to it. Once I get one zone, that’s it. I have the one zone. I can’t add a second zone afterwards, right? All I can do is —
Andrew: I could?
Mark: It’s totally modular. You can start with a single zone system. If you like that, you can upgrade that by getting a second machine to full dual zone and that’s great for couples.
Andrew: Got it. I might say I’m too cold at night, go out and buy one of these things, not even ask my wife. That was a big issue for them, will someone be able to ask their wife and get their wife’s permission. You might be able to go out and get it for about $300. I put it in my side of the bed. My wife says, “Hey, you’re really toasty. I’d like to have something like that for my side of the bed too,” and I can go out and get one for my wife. That’s what you’re talking about, lower entry price.
Mark: Exactly. Entry price cools and heats the whole bed. If you want half-warm and half-cool, then you go to the dual zone, and you’re keeping what you have and just adding to it.
Andrew: Or I can buy two different devices.
Mark: The dual zone actually is two different devices bundled together on the same bed.
Andrew: All right. How much money are you making? Let’s talk revenues 2016.
Mark: Right. So we came out of the gate in 2015. That was our first year shipping this product. We did around $1 million our first year, so unsophisticated. We basically hung the thing out on the internet, BedJet.com and Amazon just to see what would happen.
Andrew: Both of those two sources and did you do Kickstarter in 2015? I can’t tell right here. 2014?
Mark: We did a Kickstarter in 2015 as well as 2014.
Andrew: So if we’re talking about the first year was 2014 then, right?
Mark: 2014 we weren’t shipping product.
Andrew: Got it. You did just do the Kickstarter campaign. . .
Mark: We were developing. We did a Kickstarter. We were getting the product launched. 2015 was product launch for us. So we did $1 million our first year.
Andrew: Let me just go through all the numbers. I’m number obsessed. 2014, only thing you had was Kickstarter kicking in revenue, $58,000 roughly, $59,000 almost in sales. 2015, about $1 million in sales coming just from your website and from Amazon, nothing else?
Mark: All of our sales, but the majority of sales we did that first year were direct to consumer online from a variety of sources.
Andrew: Was there a third source that was worth mentioning, a third source that did well?
Mark: We had some retail in our first year that didn’t perform nearly as well as online.
Andrew: That was a surprise for you because you thought that people would want more conversation, more experience, right?
Mark: We did. We thought a natural home for this product was going to be in mattress stores. Right out of the gate, little tiny startup BedJet, we get a deal with Mattress Firm, the biggest mattress retailer in the country, number two company is a distant second. We’re so excited. We’re like, “This has just made the company. Done. We’ve just got to execute and get product out there.”
We had some sales events with them, and we were successful. I was personally there on the sales floor and the attachment rate was great. The floor salespeople were enthusiastic about it, but as soon as that disappeared, the sales dropped down to nothing.
Andrew: Oh, wow.
Mark: What we came to understand because the BedJet is a cooling and heating product for your bed, our product, our $300 to $400 product, completely obliterated the value proposition of companies like Tempur-Pedic, who have this cooling mattress that is a $1,500 to $1,800 upsell and sort of keeps you cooler a little longer. Their marketing is a little deceptive. But they have these bread and butter products that they’re selling hundreds of millions of dollars on. They don’t work that well versus their marketing claims. They keep the bed surface cooler for a little bit longer, but they’re not powered —
Andrew: How did that impact the fact that you weren’t selling when you weren’t standing in the store?
Mark: Basically, our $300 product completely threw out the window the need to buy this $1,800 upsell on a Tempur-Pedic. Tempur-Pedic is bread and butter.
Andrew: I see. If I’m running a mattress store and I can either sell something for $1,500 or have an add on for $400 or $300, I’d much rather sell the higher ticket item. That’s what you were finding.
Mark: Exactly. Especially when that higher ticket item is from a vendor that is bread and butter for you. So what we found in the retail settings was that we’re too disruptive. We were such a unique technology, such a competitive price point versus the other stuff out there that wasn’t powered, but was sort of making the same pitch. It was sort of like we were a virus.
Andrew: So does any significant portion of your sales come from retail anymore?
Mark: So, in 2016, we gave retail the opportunity to see what it would do for about two years. 2016 was the end of that experiment and as the head of the company, I made a decision and I said, “Guess what, retailers? Screw you all. We’re done with you. We’re going to build our own brand, and we’re going to go customer direct.” Doing that allowed us to lower our price and control our destiny.
I can tell you had I waited for all the promises of these retailers to pan out, because they’re slow-moving, they take forever, they want you to invest the millions of dollars to drive consumer to retail. They’re not going to do it. When we finally let ourselves go from that, really the results were amazing. Dropping the price going consumer direct, we literally doubled sales overnight.
Andrew: Okay. So that means 2017 you did how much in sales so far? We’re about halfway through the year.
Mark: So, 2015, our launch year, we did $1 million. We tripled the following year.
Andrew: Sorry, 2016, you had $3 million in sales. Okay.
Mark: Approximately. This year, we’re on track to probably double that.
Andrew: So, so far this year, you’ve done about $3 million?
Mark: Not quite, but close.
Andrew: $2 million, $2.5 million, somewhere around the year.
Mark: We do a huge [inaudible 00:10:38] during Christmas.
Andrew: I get that. Let me ask you this. I see how the business is growing. Is it profitable?
Mark: It was profitable from the first year and it had to be.
Andrew: And you’re living off of this because you have no outside funding, do you?
Mark: When I first started the company, I had another business that was funding me and funding BedJet. It had to be profitable right away because I self-funded the whole thing. I’ve done okay in life. I’m not a wealthy guy. This was emptying my life savings—
Andrew: Don’t give it away. You got down to nothing and almost lost your wife over this. I want to get into that. But let’s go back and understand how you got here and how you built this thing up. It is an interesting success story over here. You say you’re a NASA scientist. That’s your background. That’s what you were doing before. I went to your LinkedIn profile. I don’t see NASA anywhere on here.
Mark: Right. NASA doesn’t make anything. They buy their space shuttles and space suits and all their equipment they buy from major industrial companies. So I was an engineer for the company that designed and manufactured and serviced the space suit for NASA.
Andrew: It’s very misleading to keep calling yourself a NASA scientist when you’re a guy who’s working for a company that NASA buys from, right?
Mark: I don’t call myself a NASA scientist. So wherever that branding came from, that must be some journalist.
Andrew: What’s your phrasing for it?
Mark: I’m an ex-engineer who worked on the space suit program for NASA.
Andrew: That’s your phrase for it.
Mark: That’s my background. Anybody who’s designed or built anything for NASA — I worked for a company called Hamilton Standard Space and Sea Systems, which is part of United Technologies, huge industrial company. The whole floor was full of guys doing stuff for NASA. We had a guy called Dr. Flush, he designed and made the toilet for the space shuttle.
Andrew: Here’s where you’re coming across as a NASA engineer. The Forbes article that was written about you, really good, positive Forbes article says, “The former NASA engineer spent a year and a half and his entire net worth plus some in developing the BedJet.” I see on Quora.com that he worked on NASA space — there they’re actually getting it right. Furniture Today, NASA engineer — it’s somehow out there. San Diego Tribune, “And the former NASA engineer says. . .” I just typed in the phrase “NASA engineer” and your name. It’s out there a lot.
Andrew: But you’re saying you’re not the one who puts it out there.
Mark: No. However you describe it, I am an engineer who worked on NASA programs.
Andrew: The point, I guess, is it does sound better if you say it that way, but you’re saying, “Look, the point for me is I know how to create things that I can actually put out into space.” And then you go to bed in Santa Monica, you told our producer, about 2001 and you’re uncomfortable. Why were you uncomfortable in bed in 2001?
Mark: I’ve been a chronic hot sleeper. I’m one of those guys that cranks the AC down all the way. I wake up at 3:00 a.m., I’m too hot. I throw the sheets off. I put them back on. So it’s always been a personal issue for me in that regard. Going back to that experience on the space suit, on one hand, we’re like wait a second, we can keep astronauts perfectly comfortable in space, the most hostile environment possible. Yet, here most of us or many of us can’t get perfectly comfortable in our beds. So, to me, it really jumped out as a place that was ripe for some technology, ripe for some innovation and ripe for a little more comfort.
Andrew: You know what? I can’t stop looking up the phrase “NASA engineer.” It is all over. You are referred to as NASA engineer on ABC’s website for “Shark Tank,” on “Geek Beat TV,” Inc Magazine, BI Times, where was that? A major Indian — IB Times, which I think is an Indian, no, that’s an Australian site, all over the place. I’m not putting you down for it, frankly, if that works for you, I want to understand it. I like that you say NASA engineer, I like understanding that you say NASA engineer because I do think that puts a clear better picture in people’s heads than an engineer for a contractor who sold space shuttle technology to NASA.
Andrew: To me, that is more important as a takeaway, that you’ve come up with this phrase and it stuck. It’s on your Facebook page too, Facebook.com/BedJet that’s coming up. I think it’s fine. I just want to acknowledge it here on Mixergy because I want to see how businesses are really built and if that’s part of what it is, I want to know about it.
Mark: Right. I’m getting an undertone that you feel like it’s a slightly deceptive tagline or slightly deceptive marketing. I don’t feel in any way explaining my background as an ex-NASA space suit engineer, NASA space suit engineer is in any way inaccurate or misrepresenting. It’s the world of NASA prime contracting. There are folks that work in NASA that aren’t employed by NASA, and they sit there every day and work for the same companies I did. They’re all considered part of the same team.
Andrew: I get that. Saying misleading or not is a value judgment I don’t want to make. I want to understand that this is a clearer way to put things. I know a lot of people who are doing really interesting, valuable successful things in the world who are downplaying what they did instead of clarifying it and making it easy for people to understand how what they did in the past relates to what they’re doing now. I want to see how you did it. To me, that’s interesting.
Okay. So you had this idea. You’ve been noodling on it for years. What was it that finally got you to take action on it and go put it on Kickstarter, because that seems like the beginning of this whole thing?
Mark: So many of us have these ideas, an invention that solves a problem.
Mark: So many of us don’t do anything about them. We file them away in our head. We’re like, “Someday I’ll do this,” and then three years later, you see it on a shelf.
Mark: We’ve all experienced that moment, like, “Man, that was my idea from five years ago.” BedJet goes back to 2001. It goes back so far in my life. I filed it away. This will be neat. This will be neat to do to have a bed that you can press a button and instantly feel cool, instantly feel warm, instantly feel dry, whatever you want.
Honestly, there was a couple of triggers that brought out the desire to do this. My mother was stuck in bed for a couple weeks on a surgery, and she’s in a 100-year old Connecticut house. It was cold, and we had like electric blankets and space heaters and mattress pads. Everything was too hot and too cold or too many wires. That’s when the light bulb went off and I’m like, “Wait a second. I had this idea to fix this problem 15 years ago. So let’s do something.”
I’m a guy who likes to build things. I’m very technical. And BedJet started out as a hobby project. It was a tinker project. I designed it and built it on my kitchen table.
Andrew: What did you use to build it? Creating heat that’s safe like this is pretty intense. What did you use to build it? How did you build it?
Mark: So, in this market, we want to talk about the cooling too because the cooling is just as important as warming. I think even more of us enjoy cooling in bed than heating. So the first product was a Frankenstein discombobulation, a motor from a broken hand dryer, an electric heater coil, some homemade electronics. The thing was ugly. It was in a steal box. I didn’t know if it would work. From the first time I plugged it in and tried it, I was like, “This baby works. This thing feels pretty good.”
Really, it didn’t start out as a grand business plan. A lot of entrepreneurs, they’ll research the business they’re going into. They select it. They come up with a business plan. For me, this was a hobby tinker project that just grew legs. As I had more people try it out, people would say, “Mark, this thing feels really great. There was nothing else out there quite like it.” It was the first product that could rapidly cool and heat your bed. Everything that came before—and there’s very few products — very slow, turn it on 30 minutes before you go to bed. This thing, you press the cool, you shoot the cool in 10 seconds.
Andrew: Okay. So you made it. You built it at home. It was kind of like this ugly Frankenstein of a creation, but it was enough, the first step, was it going to Kickstarter and seeing if people would buy or were you trying to make calls in selling it to the mattress retailers?
Mark: So I’ve been in new product development and new product introduction for a long time. One thing I’ve come to understand, you never invest money in something without some market validation. So many entrepreneurs and inventors, they’re passionate about their idea, they’re passionate about their product and they believe in their core in their heart this product will be a success. Those opinions don’t matter, honestly, the opinions we have of our own products—
Andrew: I get that. Of course they’re going to love what you created. It’s your idea. You put it out — was Kickstarter the first place you sold it?
Mark: Kickstarter was the first place.
Andrew: You put up this video and the video seems like kind of a homemade video. It’s you doing voiceover. It’s you —
Mark: That video had a budget of zero dollars, right?
Andrew: But it’s well done. I can understand how it works. I can see the creator. The only thing that was a little weird about it was there’s this quote in the beginning that I couldn’t fully understand. I said it comes on for one and a half seconds. There it is. I pause it. “A lot of people like snow. I find it an unnecessary freezing of water,” Carl Reiner.
This is not going to help your marketing at all. It’s just like a passion project when I see a quote like that. That quote is not going to help you sell. It’s just something you care about, and it makes me feel like this whole project is your passion more than you trying to maximize sales.
Mark: Right. At that stage, this was a passion project.
Andrew: All these articles that I see here mentioned on your Kickstarter, that was you generating interest, right?
Mark: On the first Kickstarter, there was nobody in the company. There was me—
Andrew: That was you emailing The Guardian and telling them about BedJet?
Mark: A lot of folks actually find you once you have an interesting Kickstarter. It’s just a great platform for market testing and market validation. Going back to my statement, it didn’t matter what I thought about the product. What matters is the paying customer who’s willing to take cash out of his wallet.
Andrew: I see. This article on The Guardian is really good. It basically just features you. “Crowdfund This—BedJet is a personal air conditioner for your bed,” and then they’ve got your video and so on. All right. We’ll come back in a moment about how this campaign did, whether it made sense for you or not and what you did afterwards and why you nearly lost your wife over this. I like that kind of dedication.
First, I’ve got to tell everyone that if you are equally dedicated to closing sales, you need a software. You need a tool that will hold you accountable and make sure that you actually close as many sales as you want to and help you grow your sales and have a whole team of people to support you. That’s why I highly recommend Pipedrive.
Now, every time I talk about Pipedrive, everyone starts to think about their CRM. They have a better CRM. It has more features, more this. This has fewer features. Mark, do you know Pipedrive at all?
Mark: No, I don’t.
Andrew: What do you use to close your sales? When you were closing mattresses — I’m going to come back to the sponsorship message in a moment, but what did you use?
Mark: Well, our sales strategy changed over the years.
Andrew: But when you were making calls yourself to local stores and bigger regional—
Mark: When we were oriented on retail, we had tremendous success at tradeshows. We showed up at one of the top two tradeshows for the mattress industry with our prototypes. Nobody ever heard of us. We had a booth at the lowest rent district of the show. We had the busiest booth of the entire part of the show we were located at.
Andrew: But, Mark, if somebody was interested in BedJet and they gave you their contact information, what was your process for following up with them?
Mark: If it was on the retail or distribution side, I have a book full of cards and stay in touch, make phone calls, emails manually. We didn’t have a specific system.
Andrew: I would do it manual too, because you want to get some feedback. Here’s what I would do. I would imagine the process for closing a sale from something like that is step one, just collect all their information in one piece of software so I have it all organized and not a bunch of pieces of paper sitting a drawer or a box somewhere.
That’s step number one. Step number two, I might send him a follow up note saying, “Good seeing you at the conference. I’m going to let you spend some time recovering from the conference. I’d like to follow up one some of the things that you’d mentioned.” That would be step number two.
Step number three is call him up and schedule a phone call. Step number four is probably going to be follow up with them because they didn’t schedule a call with you. So, send them another email saying, “Let’s get on a call and follow up on what we discussed at the conference.” Step number five is get on a call with them, then you send them follow up information and so on.
Every one of these steps, because I’m an organized guy, would be laid out beautifully in Pipedrive. Each step would have its own column. Everyone who gave me a card would have like a digital version of a card, something that looked like a paper card representing them in my Pipedrive in column one.
As I sent follow up emails after the conference, I got to move each one one column over, second column in my Pipedrive is follow up. I see you’re nodding. You’re kind of getting this and maybe it feels a little anal for you, but I’m telling you anal wins the day, right? Every step of my process is clearly laid out in Pipedrive. Every day when I look at my whole Pipedrive screen, I see all my columns and I see how many people are in each section of my process.
How many people did I meet? Lots of them. How many of them did I follow up with? Not enough. Dude, get on it, more. How many people did I follow up with and I didn’t ask them to set up a call? How many people did I ask to set up call but they didn’t do it? I need to follow up and send them another email asking them to get on a call. The whole thing is organized. More importantly, as you bring in new people, they get to collaborate and help you close sales.
Guys, this is a very, very visual piece of software, which is why I see that Mark is nodding at some of the ideas behind it and also, I think I’m losing you on some of the concepts about how to implement these ideas. I really want everyone who’s out there who’s listening to me who wants to close sales and if you don’t want to close sales, dude, get off my podcast, but if you want to close more sales, if you want to business in an organized way, you’ve got to go check out Pipedrive.
Because it’s so visual and because you have to see it and experience it to believe it, they’re giving you 14 days free to try it out. Try it for 14 days. Experiment with it. Go watch “Shark Tank.” Maybe see Mark on “Shark Tank,” see him get ripped into by all the sharks. While you’re doing that, play with Pipedrive, with their free version. Frankly, if you like it, keep it, if you don’t like it, you can cancel, no problem at all.
You will, if you keep it, get 25% off, if you use this special URL, that’s 25% off for a full three months afterwards. Mark, they already have a low price, their issue is their price is too low, seriously. So anyone who’s out there, go check out Pipedrive.com/Mixergy. Don’t do it because of the 25%, don’t do it because of anything else other than that it will actually close your sales and when you play with it, when you see it, when you try it out, you’re going to instantly understand it. It helped us so much, not just with booking guest, which we use it for, but every time we want to sell, we fire up another Pipedrive account and just get to business.
Do you need a mattress salesman, or do you need a BedJet salesman? I feel like I could come in there and Mark, I would implement Pipedrive. I would start making sales myself and then I’d have a whole team of salespeople calling on local stores for you. Crush it.
Mark: That sounds like an incredibly valuable tool. We don’t do retail anymore.
Andrew: It doesn’t work for you, right? You need like online marketing. You’re like a Shopify guy, how do you get more people to your site, how do you get more people to buy from Amazon, right?
Mark: You got it.
Andrew: That’s where you are.
Mark: That tool sounds incredibly valuable for B2B companies or when you’re reaching out to large numbers of retailers or wholesalers or distributors. We’re 100% focused now, we’re an ecommerce company that happens to manufacture their own product. So we’re direct to consumer. Everything we do is a direct to consumer path.
Andrew: All right. I get that. Frankly, in that case, Pipedrive is absolutely not for you or for anyone who’s in your situation. You need online tools. Fair enough. Let’s come back to your story.
You get onto Kickstarter. You say on Kickstarter that you’re aiming for $38,000. You end up with $58,000, nice little bump. You go out there to produce it. How is production for you? Who did it and how did it work out for you?
Mark: We took almost nine months from pulling the trigger to getting to production. This is from prototype to product that we can manufacture and get out the door and probably another two or three months to get certifications and things like that.
I tried my very, very hardest actually to build this thing in the U.S., and we started talking to local factories and suppliers. It’s almost a sad state of affairs where small consumer appliance manufacturing is almost a lost art in the U.S. I concluded we’ve got to go overseas where they manufacture the Keurigs and the fans and all the different things that you buy that you plug into the wall from Bed Bath & Beyond.
So we went overseas. We started working with overseas suppliers. We were very fortunate to meet some really great people who make some really high quality stuff. One of the things I put in place from the very start which was important to me was scalability. So we worked with a manufacturer who should our sales ramp up like crazy could keep up with us. We didn’t know where the sales were going to go, but building that into the start so if we ever hit that hockey leg where suddenly we’re doing $20 million and $30 million and $40 million, supply chain would never be an issue.
Andrew: How did you find that person?
Mark: It’s an art finding the right suppliers. We identified a set of factories that built products with similar components to BedJet, right? Factories with experience with air handling equipment, you go out and do a survey, you create a supplier audit survey, so you do a lot of back and forth on email and you start with 20 factories and then you get down to 10 and then you get down to 5 and then you go out and visit. You meet with the people. What I found, it’s just as important if you’re manufacturing overseas, your chemistry with the factory owner is just as important as how good the factory is.
Andrew: So you went to visit them, you got a translator to come with you, you had conversations. Did you get drunk with them? I hear that’s a thing.
Andrew: You did? Was that fun, getting drunk with someone that you didn’t—
Mark: You wind up getting drunk with those guys.
Andrew: It was. Was your translator like the only sober person there?
Mark: No. These are companies where 95% of the company doesn’t speak English, but the people who are at the top, they all speak perfectly fine English.
Mark: That’s one of the requirements in selecting a partner.
Andrew: Is one of the requirements also—
Andrew: Is one of the requirements also that you get drunk with them? Am I understanding that right? I’m not kidding here.
Mark: Not at all.
Andrew: You could be a teetotaler and be okay.
Mark: No. It’s not a requirement, but at the end of the day, you’re doing business in parts of the world where contracts don’t matter, where the rule of law according to what we’re used to here in the U.S. doesn’t matter. So you can have a contract, and they’ll tear it up and good luck suing somebody in Thailand or China or any of these other places.
So a lot of setting up manufacturing overseas goes back to having a relationship, having a good relationship with the management or owners of your factory. If you don’t have that, a personal relationship where you trust each other, you’re at risk. That was a big part of my selection process was finding a guy that I had a lot of confidence in, a lot of faith in and just a good personal chemistry with.
Andrew: Okay. So you do that, you get your product created, you get it put out there in the world. Then go to Bed Bath & Beyond. It seems like that didn’t work out so well for you, right?
Mark: They came to us.
Andrew: They came to you. Because of the Kickstarter campaign?
Mark: Nearly all of our retailers came to us. The only thing that we did on the marketing side, I would call it Kickstarter marketing campaign, but we went to a couple of tradeshows. Bed Bath & Beyond came to us at a tradeshow. They said, “This is really neat. We love this. Let’s take it for a whorl.”
Andrew: I’m trying to find this viral video that you told our producer about. You said it got 44 million views. What’s the video that you’re referring to?
Mark: So we had a viral video. It was a random Facebook page with gadgets. I think it was LADbible out of the UK. You can type in LADbible and BedJet, and it will come up somewhere. But what we have found are most effective marketing campaigns aren’t the stuff that we invest money in. It’s really insane.
Our growth curve as a company is defined by crawling out of obscurity. We’ve sort of invented this new product category. This is the first product that’s rapid cooling and heating for your bed. So while there’s all these mattress startup companies that rocket to these amazing sales, they’re dipping their cup into an existing demand. There’s a million people online every month Googling for a mattress. We don’t have anyone online Googling for climate control beds.
Mark: It’s a solution nobody knows about because it’s a new product category. So our biggest challenge as a startup is crawling out of that obscurity and getting that category—
Andrew: I get it. What do you do to do that? I get it because it really is a problem. No one knows it exists, so they can’t want it. Even if they know it exists, they’re not going to understand it immediately, it’s going to take them a little while, a little time to get used to the idea. So what’s your process for doing that?
Mark: So you do all the traditional marketing things. You hire a digital marketing agency and a PR agency—
Andrew: Did that work? I’m going to sit down, by the way. I’ve been on a stand-up desk all day.
Mark: I’ll tell you, the best results we had, we did all those right things. We invested in the digital marketing and getting bloggers to talk about us, but the very best results we had were organic, meaning people found out about the product somewhere and it resonated with people. The viral video, for example, we didn’t pay for that. Somebody took a few different pieces of my video assets without even telling me and put together this 30-second video that they posted on a random Facebook page and about 45 million views later, all sorts of people know about BedJet.
Now, I can’t tell you how much money I spent creating that video, promoting it trying to make that video be self-sustaining and make it go viral. We couldn’t. Then here some random event happens that eclipses every other marketing expense we’ve put in, in terms of ROI.
So, in many ways, the success we’ve had by not having a giant budget, like giant sleep companies like Sleep Number and Tempur-Pedic, they out-spend us a million to one on marketing. In many ways, the success we’ve had is because the product resonates with people. When they try it, they love it.
Andrew: How do you try it? If it’s all online, you have to buy it.
Mark: You’ve got to buy it, but it’s a risk — we make trying the product out 100% risk-free. You get free shipping. You get two months to try it. If I t doesn’t work, we pay for the return shipping, no restocking fees. So we take away that barrier of, “If I don’t like it, I’ll be stuck with it.”
But really, I think one of the most rewarding parts of creating this company and getting this product out into the world, it’s the highest customer-rated product on all of Amazon in the entire mattress category. Now, that sounds like a really exaggerated marketing claim. It’s absolutely true. Any product that sells in volume on Amazon in that mattress category, we have a higher percentage of 5-star reviews than any other product. That’s versus like 2,500 other companies.
Andrew: Now you’re making me want to go in and see can I find someone has more ratings, more anything.
Mark: Go ahead. You won’t find them as a volume-selling product. So if somebody has five reviews, that doesn’t count. We’re talking folks with hundreds and hundreds of reviews.
Andrew: What about this, the linen spa memory foam and inner spring hybrid mattress? They have a thousand reviews.
Mark: Okay. That’s legitimate.
Andrew: 1,064 reviews. Oh, I see, 76% of them are 5-star and yours is higher than 76.
Andrew: That’s what you’re talking about.
Mark: I haven’t been able to find anybody in that 500+ number of reviews. I don’t think that out there, I think what I said is accurate. If there is somebody out there, then we’ll be number two. But regardless, it’s an incredibly hard thing to do. You have all these vying for people’s attention in the sleep category and this product and this product has had a response that’s incredible. So that’s really driven, just having this — let me put it this way. When somebody buys a product that does something good for them, they may write about it or they may not.
Andrew: I get it. The fact that it’s a better product, this isn’t a product show, so I care about it, but not a lot. The question of how do you get people to review is interesting. I know your first Kickstarter campaign, you said, “Look, guys, I’m working really hard to get this thing out there. Will you do me a favor, if you bought this thing, you have the right to tell Amazon what you think of it, please go to Amazon and rate it.” I can see how that would help. What else did you do to increase reviews on Amazon?
Mark: So when you’re a small company trying to compete with billion-dollar companies who outspend you a million to one on marketing and all these things, you’ve got to have a couple of things to get those reviews. One, you have to have a better product. You have to have a product that really gives someone such an exceptional experience they want to talk about it. We have it.
But the other is a lot of these large companies have lost the art of customer support, technical support, customer service — I’ve been on the receiving end of so much crappy customer service in my life that one of the grand experiments in BedJet was seeing what would happen if we just take incredibly good, ridiculous good care of people who buy our product.
Andrew: So what’s an example of something you do that most people wouldn’t think to do?
Mark: We take returns out of the warranty period. Somebody says, “It works for me, but it doesn’t do this,” we’ll find a way to make it do that. Somebody says, “It doesn’t fit on my bed,” we’ll make a custom part. We return emails — this is basic stuff that big companies just have forgotten how to do or don’t care how to do — return email within a couple of hours. We’ve all gotten accustomed to sending that customer support email and maybe I’ll hear back, maybe I won’t, maybe it will be a day from now two days from now.
Andrew: What happens if I call your main number right now? Who does the number on the website go to?
Mark: It goes to our main office. We’ve got a customer service team working down there. But that kind of bend over backwards—
Andrew: This is a person — this is you, by the way, isn’t it?
Mark: That’s me.
Andrew: What helpdesk software do you use?
Ida: Thank you for calling BedJet. This is Ida. How may I help you?
Andrew: Ida, hi. My name is Andrew and I’m actually recording on this side because I’m really curious about the mattress. Is this a mattress, by the way, that I’d be buying?
Ida: I’m sorry. I can’t hear you, you’re breaking up.
Andrew: Is this a mattress that I’m buying that heats and cools or is it something else?
Ida: No. It’s a thing that connects to your mattress. You don’t have to change your bedding.
Andrew: I see. If I just want to be warm but not have my wife be warm, can I do that? What would it cost me?
Ida: Yes. In that case, you’d need our Dual Zone AirComforter. So you’d buy one unit, which is $369 right now.
Ida: Let me check the pricing for you.
Andrew: What happens if I use it for three months and want to return it?
Ida: Well, we have a 60-day return policy.
Andrew: Is it expensive to ship back?
Ida: It’s free return shipping if you’re located in the U.S.
Andrew: I see. So I just want to try it. I put it in my bed for 59 days, my wife says, “Get this thing out of the bed,” I put it in a box, you guys will pay to take it back?
Ida: Yeah, of course. You do have 60 days. Most figure out within the first two weeks if it’s the right product for them, but we do give you guys 60 days. So our units right now are $369, and then you need the Dual Zone AirComforter, which is — what size bed are you.
Andrew: Queen. I see. So, I also need in addition to the device, a new comforter because my comforter won’t work with this, is that right?
Ida: It’s not a comforter. It’s a top sheet. It replaces your top sheet and you use your comforter over that.
Andrew: I see. I need both of them.
Ida: You need both of them to keep the air on your side of the bed. If you wanted the air throughout the entire bed, you can use your own top sheet.
Andrew: I see. Thank you so much. I appreciate all the help.
Ida: You’re welcome. You have a great day.
Andrew: It’s 2 minutes, 22 seconds, she picked up on the first ring. That was damn good.
Mark: Right. So, listen, the mechanics of it really don’t matter. The philosophy behind it for us is we treat our customers as if we sold something to our neighbor. How would you treat your neighbor if you sold them something?
Andrew: All right. Now we’re getting close to home. I’m going to talk about my sponsor and then I’m going to come back and find out what happened with your wife because I’m really impressed that this happened and I also am wondering about my own sanity that I’m impressed this happened or my own compassion that I like that this happened.
But the sponsor that I’m about to talk about is a company called Toptal. Do you know Toptal or am I about to blow your mind with something?
Mark: You’re going to blow my mind.
Andrew: Great. Here’s the idea behind Toptal. It is really hard to find great talent. I’m talking about largely developers. How many entrepreneurs in San Francisco are here building companies in the most expensive in the city in the country, I feel, just because they want to be around the best developers on the planet? Because the best developers aren’t like two or three times better than the next best, they’re ten times or more.
Well, the idea behind Toptal is these guys said what if you don’t have to live in San Francisco to get the best developers in the world? What if we could just put together a database of the best people? We’re going to be rigorous. We’re going to screen them out. We’re going to be dicks at times to say no to nice people, say no to — I see your eyebrows went up. I just called my sponsors dicks. But they are. They’re kind of aggressive because they know that the best developers want that harsh test. They want to actually show how good they are. Everyone else can go and work harder if they want to be part of Toptal’s developer network.
So Toptal, maybe I shouldn’t call them dicks, but I will say that they are really discerning. The word dick is making your eyebrow go up. I should not be saying it in a sponsor—I’m curious about you. What do you think about that word? I usually don’t curse. What do you think?
Mark: I don’t have a problem with it at all.
Andrew: I kind of do. I think that I’m trying to riff here and I hope I’m not going a little off the reservation with it. What I’m trying to say is they really do have a strict testing process and people who make it through are very proud and people who don’t I think are a little upset that they didn’t make it through, but that’s the idea behind Toptal. They want the best of the best in their network.
So when anyone out there wants to hire a great developer, they can go to Toptal, let them know what they’re looking for, what kind of projects, short-term, long-term, whenever and Toptal will connect them with the right developer. If they’re happy, you can get started often within days. If you’re not, no problem. You could just work with someone else or Toptal will go and find you someone else within their network.
There’s this great Quora post. Someone said, “Hey, I’m curious about Toptal. Who’s been with them?” And this guy, Doug, responded. He said, “I leveraged Toptal to build my mobile app design and my app’s UX. Once the thing was deigned,” because Toptal also has designers. Once it was designed for him, he went to Toptal, who also has financial services and he said, “Hey, can you guys help me refine my business pitch?”
So Toptal’s finance people helped him refine his business pitch, helped him put together what he needs in order to be ready for investors and he was prepared. He said he got a tremendous return on investment just from that short engagement. Then he went somewhere else, and he found a developer to create a site, but he realized, “I don’t want a cheap developer. I’m going to go to Toptal.” He went to Toptal and he got 10x faster at quarter of the cost.
That’s the way that the best developers on Toptal work. That’s a guy named Doug McKay. He signed up for Toptal for not just their developers but their designers and finance people. He got great results and I know that you guys will too. If you’re interested in Toptal, I urge you to go check out Toptal.com/Mixergy, where they’re going to give you 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no-risk trial period of up to two weeks. Top as in top of your head, tal as in talent, Toptal.com/Mixergy.
You know, Mark, halfway through that ad I realized the first direction I was going in, not very good, the second one, just using the case study for Doug, that was hitting home. I like that I got to see the look on your face because I think you were right. I was picking up on, “Andrew, you’re going in the wrong direction. You’re putting this out there in front of a real human being. The human being is not picking up on this, not liking it, shift.” If we were an edited program, I would edit out that first part and just go straight to the second. Should I be apologizing for Toptal for what I said?
Mark: I don’t think so, you’re a great pitchman.
Andrew: Are you a New Yorker?
Mark: I’m originally from Connecticut. I’ve lived all over. I’ve lived in California, lived overseas in Europe as well.
Andrew: I kind of sense that we’ve got this New York attitude. Maybe yours is a little nicer than mine is, actually. You do have this determination about you. I feel like that determination is what nearly cost you your marriage before you got married. Talk about that. I’ll let you tell the story instead of teeing it up with questions.
Mark: Right. So, earlier we talked about the initial birth of BedJet. Really, it was a passion project. There came a moment where I was all in. Rather than it being a tinker passion project, it became a business. It became a business plan. I took all of my prior training from all of my prior roles and applied to how do we make this thing a success.
That happened really, I think, after we had our second successful Kickstarter. So we had another Kickstarter. We did over $1 million. We did like $1.4 million in 40 days. We were one of the top ten Kickstarters in the tech category of 2015. So, we had this tremendous market validation of realizing there’s this latent demand out there that’s not being well-served by really anything.
So that was when I doubled down on the business. I became utterly obsessed with the business, as both the manager of the business and the chief engineer and still creating the product and evolving the product. The creation and evolution of the product was an absolutely obsession — 14-hour days, being on my computer, designing, 3:00 a.m., no work-life balance whatsoever, weight gain from too much pizza and no exercise, all this crazy stuff.
What I’ve really come to believe is that really brilliant inventors or creations — this applies to artists and writers, anybody who’s creating something — I think a lot of the great stuff in the world comes from a moment where the creator is completely obsessed with what they’re doing and has complete tunnel vision and everything else is drowned out. I had that moment.
I had that moment. I had gotten engaged. BedJet was just going into production. I had just spent every nickel I could beg, borrow and steal to get the product into production. We got engaged. We had a wedding date coming up nine months later. I was suddenly realizing if this thing is a flop, I may not be able to write the checks the week of the wedding. Having that kind of risk hanging over you, incredibly embarrassing risk if things didn’t go the right way, was too much.
So I went to my fiancé and I said, “Babe, I love you. I want to marry you. I don’t know if I can pull it off this year. I just don’t know. Would you please work with me and slide this wedding date out a little bit?” Now, you can’t imagine the reaction a woman goes through when she’s dress shopping and getting ready to send out invitations and all this stuff and the fiancé comes to her and says, “Whoa, whoa, whoa.”
I’m very blessed I have really a wonderful fiancé who’s now my wife, absolutely love and adore her. She’s an amazing woman. But there was some rocky moments coming out of that work-life imbalance where suddenly I wasn’t the person she started dating. I transformed into this boiler room engineer who can’t take his eyes off the computer. Then the double-whammy of, “Oh, the wedding, the business has sucked up all my liquidity and there’s some risk,” and the travel back and forth to Asia and all these things.
So there was definitely a point where it could have destroyed a relationship for me. I thank god every day that we both navigated through that and came out the other side.
Andrew: Why? Why do you think? Do you think she believed enough in this that she wanted to see it through? Was she maybe giving herself a little time to figure out if you were going to be a failure and maybe she should move on? What was it?
Mark: She had faith in me.
Andrew: She did?
Mark: She had faith in me. She had faith in the guy she fell in love with.
Andrew: Is she ready to like live on the street essentially if this doesn’t work out?
Mark: Well, that wouldn’t have happened.
Andrew: Why not? What was your backup? I feel like I’m putting myself as an entrepreneur. Who knows how deep into my pockets I’d be willing to go if I needed to, then what happens to my family?
Mark: Right. So, as an entrepreneur, I would never go so far as to put myself at being at risk for being on the street. I have a background where I can go find a job if I ever needed to find a job. Before BedJet, I was vice president of a company and making a great salary. There’s always that to go back to. There’s always a successful career to go back to.
With BedJet, the issue was — and why it had to be profitable and why it had to succeed — I spent my life savings, mortgaged the house, I mortgaged my mother’s house and the whole cliché of pulling all the money out on the credit cards, I did that. But there was always a little reserve and there was always something like, “Okay, we can go back to doing what I did before.” There was a moment where just getting into production, it was down to my last $5,000 liquid, which in the world of business building is a drop, it’s nothing.
That was the very moment I was going into production. I thank God every day that first month where we started shipping product people started buying product and the company started paying its own bills. By the end of the first year, I was able to pay myself a salary. Now, I did not give up my day job right away. So, by necessity of having to live, I kept my day job, which was another side business.
Andrew: It wasn’t until now. You were the VP of business development at Navitas Systems?
Mark: A couple different companies. I was a contract executive doing business development and sales at various startup companies. It’s a great paying job, was successful for me for seven years. I kept that going and I was able to bring it to sort of a part-time situation. That funded me, it funded BedJet and got me to the point where I could start paying myself out of BedJet. I tell this to every entrepreneur out there, don’t ever f’ing quit your day job until your business starts to pay.
Andrew: Because of what?
Mark: The threat of financial ruin and flopping. Too many ideas fail because there’s not enough money to live off for the really. There’s not enough money to fund the business and get to where you need to go. You know the failure rate of businesses, it’s high. The failure rate of new products is very high.
There were multiple times where I was so confident, too confident because of all the press we were getting and the Kickstarter, Brookstone is knocking on our door and Bed Bath & Beyond and all these people like, “I’ll just quit my day job and focus 100% on this,” and if I did that in those two or three moments where I had the urge to just eliminate that side income, I probably would have hit bankruptcy.
Andrew: You couldn’t have continued with this.
Mark: Everything when you’re starting a business and creating a product, everything takes longer than you expect it’s going to, everything is more expensive to do than you budget it, and the revenue never comes in as quickly as you anticipate.
Andrew: So bringing it back to what we started off with, this whole “Shark Tank” episode, it seemed form the outside like you had it figured out. When it didn’t work out for you, it actually was a positive, right? It got you a lot of attention. But at the time were you freaking out? Did you, “Mark Cuban, I know this guy, I idolize him as an entrepreneur, he doesn’t like me? These other people are shooting down my idea, maybe there’s something wrong with it?”
Mark: So to get on “Shark Tank,” you go through months and months of interviews with the producers, various videos, they help you hone your pitch. All along the way in practicing for “Shark Tank,” I prepared for every possible question, every possible eventuality except for one, which is they would hate me and hate my product.
It was the one thing I didn’t — the reason why is the first day the BedJet saw the light of day, everybody said, “This is great. This thing is neat. It’s a great idea.” And that’s not people in Kickstarters, that’s titans of industry. We had Tempur-Pedic and Mattress Firm and all these huge companies coming to us and saying this thing’s great. Everybody who tried the prototype, “It’s great.” Then you show up, the one thing you don’t prepare for is what goes down. It wasn’t just a gentle not liking. Some of them absolutely hated it and me personally.
So, in the seconds that that was going down on the set, I’m like, “Whoa, I am completely caught off guard.” As I walked off the show, for about the next day or two — keep in mind, we’re not in production — for a short period of time, yes, your confidence is shaken. You have these very successful, wealthy people basically telling you your idea stinks and you stink.
For a day or two, it’s easy to believe them. But I’m very lucky. I have a logical brain. I don’t rely on opinions. I rely on data. The data to me said we have market validation from consumers via Kickstarter. We have market validation from retailers. People are coming to us already. We’re not in production, not just ordinary retailers, but the biggest. We have market validation from people who have tried and used the product.
So I had this big history before that moment of momentum. Within a day or two, my mentality was like, “Screw these guys. Their opinion doesn’t matter.” I’ll go back to what I said before. The only opinions that matter on a business or product are the paying customer. My opinion didn’t matter. The sharks’ opinion didn’t matter. It’s the folks who actually take money out of your wallet to buy whatever your service or product. Those are the only people. Every other opinion, you can throw to hell. Everybody has them.
I think the other lesson there is successful, wealthy people aren’t right 100% of the time. We were right. The business has been a success. It’s growing. We’re number one in our category. But successful people, billionaire types, they only need to be right 60% of the time to get to where they are, maybe 70. They have plenty of bad calls and plenty of bad judgments they make. So, you can’t look at folks like that and think their word is gospel.
Andrew: It turned out you were one of their big success stories even though they didn’t get to invest in the business. Maybe that’s for the best because — do you own 100% of your business?
Mark: I own 100%. We haven’t taken any investment. I’ve been very blessed in that all the debt I’ve put in place to start it up has all been paid down by company cash flow. I’m paying myself a salary now. Our question now is not do we deserve to exist. The essential question all startup companies go through in their first year is our question isn’t do we deserve to exist, it’s how big are we going to get. That’s a very, very fortunate place to be. Based off public information, I believe we’re the top five most successful companies in the history of “Shark Tank” to be told no. I’m very proud of that achievement as well.
Andrew: Frankly, when I was trying to figure out where you get traffic, how people even find you, it’s a lot of “Shark Tank” related sites that are sending you traffic, like SharkTankContestant.com, which is what I’ve used in the past to research sends you a significant number of hits. Kickstarter, of course, is still sending you traffic. There’s a site called DudeIWantThat.com, which I’ve never heard of before that’s sending you traffic. I can see how “Shark Tank” and other sites that are cool hunting-type sites are sending you customers.
It’s exciting to see the story. It’s exciting to see that a guy could get hit so many times. You looked like on that show, you were handling yourself well, but I also felt like this is a guy who took a bunch of punches to the chin and he’s somehow pretending to be able to stand up, but he’s doing it, he’s standing up. It’s good to see what happened afterwards.
Thanks so much for being on here. Anyone who wants to check you out can go to BedJet.com or to Amazon, where they could check out BedJet and see your products and see all the reviews. The two sponsors that help make this interview happen are Pipedrive, which is what we use to coordinate our interview process and anything that we want to sell and Toptal, top of your head, tal as in talent, Toptal.com/Mixergy, where you can hire great developers, finance people and so on.
Thanks so much for being on here.
Mark: Thanks, Andrew. Take care.
Andrew: Thanks. Thank you all for being a part of it. Bye, everyone.