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 we’re going to talk to a guy who, at 23 years old, looked out at the mattress world, the sleep world and said, “I think I could do better.” And he did. He ended up creating a company that’s doing a massive revenue and, based on the reviews that I’ve read, has helped people get a better night’s sleep. Some of these people are saving up money to buy his sleep systems, and they’re really excited about how much it’s changed their lives. I’ve never seen people talk like this about something you sleep on that most people don’t pay much attention to.
Well, I invited him here to talk about it. His name is Martin Rawls-Meehan. He is the founder of Reverie. They make sleep systems. That includes mattresses, but it also includes what is called the power base — I’m learning a lot about the lingo of this space — and the power base will allow you to do things like elevate the top of your body so you can read before you go to sleep or adjust it so you won’t snore. This is what a woman got excited about, little tingly fingers for 20 minutes that allowed her to go to sleep better.
All right. That’s what this business is. We’re going to find out how he did it. The two sponsors who are helping to make this happen are, number one, the company that will host your website right. It’s called HostGator. And number two, the company that will help you hire your next phenomenal developer. It’s called Toptal. Martin, good to have you here.
Martin: Thank you. It’s a pleasure to be here, Andrew.
Andrew: I’ve got to go right for the dollars and cents. What kind of revenue are you guys doing at Reverie?
Martin: So we don’t give out specifics in terms of revenue, but I think what’s recently been published is around that $100 million mark.
Andrew: Around how much?
Martin: $100 million.
Andrew: That is phenomenal for a company that raised how much money?
Martin: We didn’t raise money. We’re basically built from the ground up early on and self-funded, really.
Andrew: Unreal. As I understand it, it wasn’t like you woke up at 23 years old and said, “There’s the new business.” You were a guy that said, “Let me look around and see what I should be doing with my life.” One option for you was to get a PhD. What were your thoughts about getting a PhD?
Martin: Both of my parents were professors. So I think there was some, I guess, appeal to that. I think life would have been okay, probably not as chaotic as I want it to be. I’m somebody that enjoys chaos, really wants to control their own destiny, very much into creating things. I like to move fast. I like to build things. I like to have an impact. I think I felt like I was young, why not take a swing for the fences?
Andrew: So you’re sitting around and you started to say, “Okay, if I’m going to swing for the fences, I need to be an entrepreneur. If I need to be an entrepreneur, I need a good business idea.” How did you come up with your business idea? What was your process that led to Reverie?
Martin: So one of my best friends from middle school and high school has a family that’s in foam manufacturing and footwear components in Asia. He also wanted to start a business. He and I were kind of talking about it. He’s got very entrepreneurial parents as well. We just decided, “Hey, let’s take a swing at it.” We were thinking, “What are the different kinds of things we can do?”
Sleep was one of them. It happened to be top of mind for a variety of reasons, not the least of which he was kind of working on a multimedia project related to dreams for his Master’s thesis. Then we were also thinking about some athletic apparel projects. I’m an athlete. Sleep related to athletes, sleep related to some of the other stuff. We were really brainstorming out what are the different things we can do.
Both of us, because his dad was in business, he always wanted to go into business, and I think it was really my personality to try to do that as well. We said, “Let’s start a company. Let’s get after it.” Sleep was one of the things we were talking about. It’s a kernel of an idea. We’re 23-year-old kids. We don’t really know what we’re doing, right? So we went back to Asia. I worked in one of his dad’s plants for a while.
Andrew: Before we continue, let me just pause for a second. One of the things, as I understand it, that I realized was as a guy who traveled the world, you’d been to Europe, you’d been to Asia. You actually were teaching in China. What were you teaching in China?
Martin: I taught mostly English, anything related to English. It was a university in [inaudible 00:04:34] in China.
Andrew: That broad experience led you to look around, see how people were sleeping around the world and you said, “They’re sleeping differently in the rest of the world than they are in the U.S.” Talk to me about that difference. What did you see in other countries that in the U.S., people weren’t doing?
Martin: What was really interesting, I noticed really this crystallized for me when I was over — I was 23. We started the business. I went over to Asia to work in the factories and attend tradeshows. Obviously, having lived in Europe, lived in Asia, beds are completely different, by the way, in Europe and Asia and the U.S. But when you go to these tradeshows —
Andrew: Wait, how are they different?
Martin: Well, in Asia, they’re extremely hard, firm. It’s kind of like sleeping on the floor, whereas in the U.S., we like our beds softer. In Europe, I wasn’t really exposed to this as much as a student, but what I saw in the tradeshows and working with some European companies as I dove in over there in the foam part of the business was that Europe was very much about specialty sleep, these really different, unique foam mattresses. They have power bases underneath.
They were really thinking about the body and the ergonomics of the body as opposed to what I think we do in the U.S., a lot of sort of big kind of 15-inch beds that were all about sort of plush poppers and this interesting kind of, I don’t know, Napoleonic-type gilded look with the mattress. This was a while ago. Specialty foam sleep, ergonomics really hadn’t made its way into the mainstream here in the United States. So power beds really, they weren’t selling many here in the U.S., but Europe, they were really common.
Andrew: If anything, frankly, Martin, they were selling them towards older people. Like if you were late in life and you wanted to watch television before you went to sleep, you’re probably watching television all day long, this is the bed system that’s going to allow you to sit up and watch TV. I have to tell you, even as a kid who liked to read before going to sleep, I used to watch those commercials and say, “I’d like to get that,” but they didn’t speak to me. It felt a little bit weird. So I never got it.
It makes sense, right? Why should you be laying — I hate lying in bed. I take my wife’s pillow before I go to sleep, just so I can read a little bit before I pass out. I see it. That’s what you were noticing. You said, “They have a much more sophisticated system there. We seem like we have an antiquated system here. Maybe this is an opportunity.” So the first step that you took to explore this opportunity was what?
Martin: Well, it really, for me, again, coalesced with the power base, realizing that just like you said, I think the product really appeals to a wider audience than, for example, in the United States, we were really marketing to. You’d see those commercials for the power bases, and they would come right after the commercial for the Clapper or something like that.
Andrew: Bingo.
Martin: It was really if you’re 65+ and you can’t get out of bed as opposed to a lifestyle product. So, to me, it was obvious what they were doing in Europe. It was different. The other thing about it that really appealed to me was I’m 23. At the time, I was like the one who was the early adopter for all the different technologies. I was kind of like today’s young millennial. It was really something that I looked at the marketplace.
Even the technology they were using in Europe was really from the ’80s. There was nothing new, nothing that exciting. I’m looking at what was happening with cellphones at the time, converting to smartphones, what was happening with computers, all this cool stuff. There was this great tech out in the world, and we’re not using it in our industry.
So I said, “Man, there’s got to be a way to incorporate some better technology into the sleep space to improve people’s quality of sleep.” For me, that’s when a power base kind of became the center of what we did, and we built the whole customizable mattress platform on top of that, really.
Andrew: Did you build the power base yourself by hand, the first one?
Martin: The first samples, I didn’t build them by myself by hand, but there was a lot of tweaking that was done by hand. In fact, one of the first prototypes that we made to sell my uncle and I had to do a lot of jerry rigging to get some special electronics on it. It was very much do whatever the heck you’ve got to, in my grandmother’s garage, whatever the heck you’ve got to do to get the product ready for presentation.
Andrew: To show it to whom? Who are you showing this hacked up prototype to?
Martin: So leaving specific customer names out of it, out of respect for them, some pretty major retailers. Now, we didn’t go in and make promises we couldn’t keep. I knew what we were going to be able to do. It’s just did you have exactly what they wanted at that moment to see. You kind of found out a couple days before actually they want this, well, hey, let’s go freaking make it happen. It was one of those situations.
Andrew: You went straight to retailers?
Martin: Yes.
Andrew: How did you get in the door with retailers, a guy with no experience, with no mattress who’s jerry rigging the stuff in your backyard or in a garage?
Martin: So there are a couple different things that happened. First of all, when I was over in Asia, my cofounder of Reverie, myself and my partner, Tony, we had some tradeshows that we attended and we were Reverie. We had our brand and we put some products out there. There were some American retailers who came over. So I had some contacts through that experience that I was using. I came back and I said, “Hey, would you see me?”
So I saw some of those folks. I hired a couple sales reps who had contacts. They would take us out to appointments as well. So it was a combination of the work that we had done in tradeshows, hiring sales reps. Then literally a lot of it as well was picking up the phone and cold calling people saying, “I know you don’t know me, but will you see me?”
And then we attended tradeshows here in the U.S. You have to get out there. You have to be a presence, because otherwise people don’t take you seriously, and it’s like anyone can show up at my door and make a presentation, but do you have the financial wherewithal, all the means to actually put a tradeshow together and that was also something we —
Andrew: You mean to put a booth together?
Martin: Well, exactly, put a booth together at a tradeshow.
Andrew: How did you get the money to do that?
Martin: Well, we had a little bit — so my buddy and I had a little bit of seed money. His dad gave us a little bit of money up front. I put a little bit of money into the business as well. And then it was literally just we got some orders early on, and I was able to negotiate deals with the suppliers in China such that I was getting paid by my customers before I was paying my suppliers. So we had a cash flow that helped us make that work.
Andrew: How much money did you guys put in all together?
Martin: I think we had a couple hundred thousand dollars.
Andrew: How much of that did you put in?
Martin: Probably about 10% of that.
Andrew: How did you get $10,000, $20,000 at that point in your life? You were just a teacher, recent graduate.
Martin: Yeah. So a couple things. Obviously, I had a little bit of money saved up. And then there was some sweat equity. Again, it was like over a period of time it was being put in. I wasn’t paying myself anything. Then I was working in the beginning another job to essentially pay for what I was doing with the business out of the gate. My partner stayed over in Asia and basically started Reverie in China doing retail over there. I was on my own trying to figure out what was going on over here. Not without help, but really, it was up to me to figure it out.
Andrew: I see. You were young at that point, 24 years old. You said people weren’t taking you seriously. You went out. You got yourself a stack of business cards to try to look a little more professional. What did you do to actually get them to take you seriously when all you had was a booth and an idea and one or two prototypes?
Martin: Well, that’s a great question. Looking back on, it you wonder like, “Wow, we were really just kids.” It’s, I suppose, a little bit unbelievable that we were taken seriously, but I think at the same time, the timing was very right for us. It just so happened that there was a company called Leggett & Platt, who had bought up the only other major competitors to them in the adjustable bed market here in the U.S.
So when they bought those competitors up, they essentially became the only supplier to the industry. Specialty sleep was just starting to take off. Tempurpedic had just gone public. Sleep Number was making a name for themselves, Select Comfort at the time. So there was this drive for a little bit of technology, power bases, that type of thing. With one supplier in the industry, there was, I think, some folks were looking for other things. There were some folks that weren’t happy with that supplier, saying, “I don’t like working with these guys. I’d like to find somebody else.”
We show up. I think our technology was pretty cool. Our story was cool. There were just a couple folks who were willing to take a shot. Granted, we got a lot more no’s than we got yes’s. But you get a few yes’s, you deliver on those promises and then people talk. It’s a small industry. When you do a good job for somebody, they talk and you can use them as a reference, and then all of a sudden, the people who were originally no’s or maybes, they come in and they’re saying, “We’re willing to work with you.”
Andrew: I see. You’re saying you were actually helped by the fact that all these companies were starting to advertise on television and telling people, “Your bed stinks. There’s a newer type of mattress that you should know about.” That helped you, or am I wrong?
Martin: No, I think it helped the entire industry, frankly. In our industry, at the time it was called specialty bedding or specialty sleep. We don’t really call it that anymore because it’s become more mainstream. But that really referred to airbeds, memory foam beds, latex beds, anything like that was called a specialty bed, and your mainstream was called your metal spring type of product.
It just so happened that airbeds, particularly the foam beds articulated a little bit better on our adjustable beds than the spring beds. A lot of the spring beds had these border rods on them. So you couldn’t use them with an adjustable bed. So Tempurpedic at the time, Sleep Number, some of those folks, made adjustable beds a part of their program. At the time, they weren’t doing that much volume. But it was a part of their program. They wanted to make it bigger.
So having a supplier — again, it was a real miniscule part of the marketplace. We’re still talking small potatoes. But it was enough of a part of the marketplace, it mattered enough and people were looking at one supplier and they figured, “We’re interested in finding somebody else who can push this in a different direction.” People were willing to give us a chance. So timing definitely mattered.
Andrew: Do you remember your first big retail customer?
Martin: First big retail customer . . . Yeah. It was a brand and a retail customer combined because it was Lady Americana in the Midwest and one of our early customers, I can’t remember who was first. It might have been Bob’s Discount Furniture out east. But our first customer-customer was a company called ComforPedic out of the Pacific Northwest.
Andrew: ComforPedic — let me look them up.
Martin: They were purchased by Simmons years ago, and then Simmons eventually rolled the brand up into like the Beautyrest part of what they do.
Andrew: Yeah, ComforPedic mattress, I knew I’ve seen them. They make mattresses and they were also going to sell your power base?
Martin: Yeah. They were a new company at the time too, cool young owner. His family had been in the mattress business, at least in the foam business for a while in the Pacific Northwest. He wanted to get into the mattress business, saw specialty sleep as this cool area for him, met up with him. It worked.
Andrew: I see. They’re selling the mattresses, and you give them the power base to sell to your potential customers.
Martin: Correct.
Andrew: What is it about mattresses? I grew up listening to Howard Stern and Rush Limbaugh, frankly, and a lot of talk radio and they would constantly have local jewelers selling men diamond rings for their weddings, for their engagements and mattress companies. It feels like those mattress companies never stopped advertising. What is it about the economics of mattresses? You’re smiling. You know what I’m talking about.
Martin: Yeah. Are you talking about mattress retailers? I assume you are.
Andrew: Yeah. It’s always the retailers. It’s not so much anymore. Now it’s the guys who like box up your mattress into a tiny little box that fits into your mail slot that you open up. You order it on the internet. It fits in your mail slot, and you’re amazed at how it opens up so big. But back then, it was every city that I lived in had another mattress king and they would advertise incessantly. What is it about the mattress industry? What is it about the economics that I’m missing?
Martin: Two things. A quick little side comment about the mattress in a box. It’s funny because that’s been around for a long, long time. It used to be sold at like gas stations and stuff like that. It was kind of your really cheap, roll pack mattress. It somehow got reinvented. It was the same thing. It always was, right?
Andrew: That’s the magic of online branding, right?
Martin: Yeah, right? And you know what? I say this. If you’re bringing awareness to the category, great. It’s kind of funny. The point is there’s all this advertising out there now, but good for them. I’m thrilled to see people doing well in the category. It’s a good thing. I would say that what’s interesting about our industry, to go back to your point about retail and advertising, is that most of the business in our industry gets done on a few weekends out of the year, a few weeks out of the year. Call them your sale weeks, right?
The end consumer has almost been trained to kind of wait for that, “On sale now, 70% off, biggest sale of the year.” What you’re doing is the customer who needs a bed is probably going to come in when they need. It’s like, “I just moved. I just whatever.” They’re going to come in and they’re going to buy the bed that day. They’re probably not going to wait for the sale. The customer who is kind of on the fence, “Do I need to? Do I not need to?” Maybe you convince them to come in, and you drive that traffic with the sale. So six, seven weeks out of the year, July 4th, Memorial Day, Labor Day, it’s trying to attract people with this big sale.
Personally, I think it’s done harm to our industry, because rather than talking about the power and the importance of sleep and why sleep matters to your health and all these great things we talk about, the consumer is now focused on sleep as a commodity, right? “Well, I can sleep on anything. I’m going to wait until that bed is 70% off, and then I’ll go buy it.” That may not be the best choice.
Andrew: And then the other thing is it’s also not a very spreadable thing. Like if you have an interesting office chair, I’m going to pay attention to it and maybe I’ll get it for myself. I happen to be sitting on a stool. One of the first things that people come in to the office and look at is the fact that I’m sitting on a stool. It’s a shareable thing. If I have an interesting mattress, nobody knows about it. So all we know about are the standard mattresses that we grew up watching our parents sleep on. It’s not a shareable thing.
Martin: Yeah.
Andrew: But for mattresses, it seems like it’s a high-ticket item. People can spend $500, $1,000 on a mattress, and it seems like there’s a high margin in it. Maybe that’s why they were able to advertise so much. Am I right? What’s the margin on an average mattress being sold at one of these Mattress King-type locations?
Martin: It varies, but you can get anywhere from 50% to 70% margin on these. That’s gross. It doesn’t take into account a lot of the other expenses, but 50% to 70%, you see it all the time.
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All right. How soon after you were going did you get sued?
Martin: We got a letter in I want to say March of 2005.
Andrew: So about two years, maybe a year into it.
Martin: Yeah, about two years into it. I had been back from Asia for about a year or so. It was about March, 2005. We got the letter. I think the lawsuit officially started maybe six months after that. It’s funny. I got the letter in the mail. I don’t know what the heck I’m doing. It’s from the big company in the industry, Leggett & Platt. I think their in-house counsel said something like, “If you have any questions, please call me.” So the first thing I do is pick up the phone and I give them a call. I’m like, “What are you guys talking about? We don’t do this, this, this and this. Why’d you send us this letter?” It was kind of funny. I think he didn’t expect me to actually call him, right? He’s like, “Well, have you retained counsel?” I’m like, “Counsel? I don’t have money for that. I’m just calling to tell you that I don’t do any of this stuff and hopefully you guys will leave me alone.”
It was pretty clear from his response on the call that he wasn’t expecting it and advised me to get counsel. So, of course, I go through the Princeton alumni network and I’m trying to find somebody locally that I can work with. It all ended up working out just fine. It was a huge education for me. But I have to admit, getting that letter and having that conversation was one of those like, man, your stomach just drops and you’re like, “Holy crap, it’s all over,” kind of moments.
Andrew: Why were they suing a 20-something year old guy with just the origin of an idea?
Martin: You know, I can only speculate. I’m sure if you ask them, they’ll probably say, “Well, we thought we had a case.” My view on it, after I spent some time thinking about it and looking back today, is that I think it’s cheaper for companies to try and sue companies out of business than it is to buy them. In this case, we were the upstart. Honestly, the only way we were going to pay for that lawsuit was to grow out to be able to pay for it. I needed to get business to be able to pay for it.
Patent lawsuits cost millions of dollars to see through to completion. In many cases, seven figures just to see through to the point where the judge says, “Wait a minute. This is really stupid. You shouldn’t be suing these guys. I’m throwing this out,” right? Well, I didn’t have $1 million to go put into this thing. So it was like grow or die. I had to grow and generate enough business to pay for this, or I was going to be sued out of business.
Andrew: So you started selling more mattresses so that you could raise enough money to hire a lawyer?
Martin: Yeah, power beds and mattresses.
Andrew: Not mattresses, sleep systems, the power bases.
Martin: Exactly, whatever I could sell, pillows, mattresses, power bases, whatever I could do.
Andrew: So they basically encouraged you and motivated you to sell?
Martin: Kind of. I think if you look at it. I don’t know — my response was my response. I’m the type of person where it’s like you got my arm in a hold and you’re like, “I’m going to break your arm if you don’t give up.” I’m like, “Break my arm.” So I was just going to go through until the wheels fell off and that was that.
I think morally, you could look at that just in general, that kind of strategy as being wrong. It’s not the way we approach things for sure, but from a cutthroat business perspective, it’s pretty intelligent because, man, they started putting six-figure legal bills on our P&L, and it was grow or die. No matter how hard you try, you might not be able to grow that fast and be able to pay your bills. So I think it was an interesting strategy.
Andrew: Is that what you did? You ended up making enough money to pay for the lawyers?
Martin: Yeah. We paid for everything.
Andrew: How much money did it end up costing you in legal fees?
Martin: I think off the top of my head, I’m ball parking it because what happened with that one was without getting into all the intricacies of patent law, which now I know far more than I did then, there’s this thing called a Markman hearing, where basically the judge decides what the claims of your patent mean.
That really determines whether or not the other side — the other side will basically want the broadest possible interpretation so they could essentially sue anyone on the planet, and you’re trying to get some reasonable interpretation. If the judge agrees with you and their case is weak, they probably say, “Well, it’s not worth us proceeding,” and you end up settling for donuts or something, or they just drop the case altogether. So we settle for really donuts. I can’t disclose, but for us, it was very favorable, is all I’ll say.
Andrew: How much money did it cost you in legal fees? Can you give me a ballpark?
Martin: Exactly, about $1 million to get to that point.
Andrew: You actually got to $1 million at that point?
Martin: Yeah, roughly. I’m just ballparking. It was roughly $1 million.
Andrew: But it shows how much you were able to sell so fast. You were a two-year old company, as you said.
Martin: Exactly.
Andrew: What was it about your sales technique that allowed you to do it? What was your process? What did you do?
Martin: Well, I’ll tell you. We lined up, like I said, early on, we got a couple customers, we performed for those customers. I was probably flying around the country, back and forth to China 12 times a year. I was working on the assembly lines. It was just anything and everything to get product out the door, make sure that it was good product and develop a positive reputation for our business. So part of it was that.
Part of it was we picked up a customer, Tempurpedic, actually, towards the end of that suit. So that revenue didn’t really help us too much early on, but it helped us a little bit at the end, where we picked up this customer, Tempurpedic, and we were able to generate some revenue that way.
Although, the lawsuit actually was really — it put us in a precarious position to even get that business, because they really wanted assurances that what we were going deliver to them was not also going to get tied up in a lawsuit. So there was a lot of expense and time and energy expended in the design and kind of working back and forth with their lawyers on that. I had to do a lot of that myself, kind of like learning on the fly.
Andrew: Wow. Meanwhile, you could have been a PhD student. You could have had the life your parents had. Did you doubt yourself at any point?
Martin: Yeah. Definitely. I think there’s absolutely no question that there were points there where I was like, “This isn’t going to work.” I’d be lying that I was like, “Oh yeah, we’re going to be fine.” You get scared pretty bad, but that kind of, like I’m not a negative person. That usually doesn’t last very long with me. It’s like look, no matter what, I’m going to fight. I’m going to go down swinging, fall down, get back up. Eventually, you can’t get back up again, so be it, but as long as I have the energy, keep going.
Andrew: Yeah. You’ve said if somebody puts you in an arm lock of some kind of and they said, “I’m going to break your arm or you’re going to have to stay here,” you say, “Break my arm.”
Martin: Break my arm, right?
Andrew: Do you have an example of a time in your life where you maybe took it too far, where you competed so fiercely that you should have actually said, “This is not worth fighting?”
Martin: I probably do that all the time, even today. It’s one of the things I really try and work on is stepping back and really focusing on the big picture. Take that lawsuit, for example, right? I called up their attorney. There were probably opportunities at certain points where I could have maybe reached out. I don’t know. Maybe I could have reached out. Maybe I could have done things differently. Once I got into competition mode, it was different.
Andrew: I see.
Martin: I think with everything, when you’re in the trenches sometimes, you can lose the forest for the trees. I’m constantly trying to make sure that I step back and I don’t lose that.
Andrew: I’m still trying to understand what it was about you that allowed you to sell or about your sales process that allowed you to get so many beds sold, so many mattresses. Go ahead. You’re thinking of the process. I want you to talk about it.
Martin: It’s funny. I didn’t have a whole heck of a lot of experience or a process. I wasn’t following a sales guru’s guidebook. I think that, ultimately, there were a lot of variables. There was timing. As I said, we hired sales reps. Some of those guys got us appointments. That helps.
I think ultimately though, if I look at what was kind of day in and day out closing deals for us over the last 15 years, I think that I’ve always focused on building a great product and something that I can stand behind. If I think if there are certain meetings and I can think of, for example, the Tempurpedic meeting in particular where it was like, “Well, can you guys do this, this, this and this?” Absolutely, not afraid. We’re going to do it. Then you go do it.
So you get challenged by your customer to do something. Because I worked the assembly line. I’ve worked in every part of our business and you name, I’ve done it, I have a pretty good idea of what we can do and what we can’t do. So if I’m in a meeting and I get challenged by a customer to do something that I know that we can do or I think that we can do, I step up and I say absolutely. If it’s a win-win for us and for them, absolutely. The key is delivering on that. If you can deliver time and time again and you develop that reputation for this guy does what he says he’s going to do, people gravitate to that and it works.
Andrew: I see. It’s this confidence in yourself that you could deliver and because you did everything from assemble the product in the garage to talk to the manufacturer, you understand what can be done. So you’re going to push to the limit of delivering what your client wants. That’s your thing. That’s your super power. Am I right?
Martin: When power beds really became our focus, I started taking engineering and advanced math classes at Harvard Extension School at night and on weekends and stuff like that to get my electrical engineering and some of my basic mechanical engineering up to snuff so that I could really contribute to the R&D process.
Moreover, if I’m in a meeting with a customer and they say, “Can you do this, this and this?” I know whether we can do it or not, or I can steer it in the right direction to make sure that it does get done. I don’t have to say, “Let me go check on that and get back to you. You have to strike while the iron is hot. You want to be in the room and if someone says, “If you can do these three things, then you have a deal,” “Okay, extend the hand, let’s shake on it right now. I’ll make it happen.” I’ve never really been afraid to put us out there and then also deliver. It’s not easy, but I think if you that, it works.
Andrew: All right. Let me do a quick sponsorship message and then we’ll talk about online sales and a couple of other things you did to grow. The sponsor is a company called Toptal. Have you ever heard of them? Probably not, right?
Martin: No.
Andrew: They’re little known outside of the tech space here in San Francisco. They’re a company that said, “Hey, you know what? The biggest challenge that entrepreneurs have and growing businesses have in the software space is finding the right developers.” They said, “What if we can go at it a different way? Instead of people place help wanted ads online, instead of helping them find the cheapest person out there, what if we get a network of the best developers and if somebody needs it, they can just come to us and we’ll have somebody ready for them fairly fast.”
In fact, for us, when I hired from them, within two days, not only did they get me on the phone with someone, but they placed them with me and this person was a phenomenal developer. So that’s their model. So many people in the Mixergy audience and listeners have used them that I can tell you tons of stories about them, including one from a guy named Eric Brown. Eric is a guy who’s an engineer himself who said, “I want to start a new business. I have an idea.” He heard me talk about them.
So he worked with Toptal. He says here, I’m looking at my notes, “They were a great organization. If I had to give them a rating on a scale of one to five, I’d give them a five.” For me, he was able to just interview one person, start the project fast and the business was up and running. He now has his whole software created using Toptal development talent. If you guys are out there and you want great developers, you owe it to yourself to not hire from Toptal, but go to them and just talk to one of their matchers. They’ll tell you whether it’s the right fit and if it is, they’ll help you by introducing you to the perfect person within their network.
Again, top developers, that’s their goal brought to you in a way that makes sense. They match you up with the right developer. Here’s the URL where you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours and get a two-week no risk trial period. The URL is Toptal.com/Mixergy, top as in top of your head, tal as in talent, Toptal.com/Mixergy. And of course, the first thing you’re going to do is talk to one of your matchers so you’ll know it’s the right fit before you get started. Go check them out, Toptal.com/Mixergy.
By the way, I’ve been looking you up, and it seems to me like, in 2008, you bought Reverie.com, right?
Martin: Yes, sounds right.
Andrew: I’m looking and I see that your site has developed over the years, but it doesn’t seem like online sales are a big source of revenue for you.
Martin: Correct.
Andrew: You tried though, right? If I look over the years on Internet Archive, I see that you were trying to sell mattresses, trying to sell beds. What’s happened? Can you talk to me about the online strategy, what worked, what didn’t, how it evolved?
Martin: So what I would say is we never really tried to sell our products online, at least in the sense that somebody’s going to go to our website, put the product in the cart, check out and that’s it, right? That’s not to say, though, that online is not a huge part of our strategy. Digital marketing and the website and the presentation on the website are huge parts of our strategy. Most customers hear about us, a lot of customers hear about us from digital advertising, but most customers, all of them go to the website. They’ll look at the product, try and figure out if it’s right for them.
The reason why most customers call us or end up going to one of our special events or retailer to buy our product is at our price point, most people aren’t willing to just put it in the cart and wait for it to show up and see if it works. Moreover, there’s a lot of education and custom fitting that we want to do verbally or in person that it’s hard to do via a website.
Andrew: What are you custom fitting?
Martin: For example, Mr. Jones needs his side firm, Mrs. Jones needs her side soft, right? They probably don’t wear the same size shoe. Why are they on the same mattress? It’s the same idea. Our bodies are different. Our preferences are different.
Andrew: So you will customize the mattress, right?
Martin: Absolutely.
Andrew: What is it that you customize about it? The internals are different. What’s different internally about them?
Martin: So it’s the pattern of DreamCells. So I don’t put any new parts in. I rearrange the DreamCells. I can take it from really soft or really firm without putting any new parts in. That’s all about the support. The comfort layer on top is the same for everybody. A lot of people are amazed laying on the firm and the soft. They’re like, “That can’t be the same top layer.” It is. That’s all about circulation, blood flow.
It doesn’t matter if you want a firm or a soft mattress, right? That part is going to be the same. The support layer is about spinal alignment, pressure points, these other things, different body types, different sleeping position, height, weight, all that kind of stuff, that’s really where that comes into play. So we have an algorithm we developed where you give us information about yourself and we can predict which orientation of DreamCells is going to be right for you or your partner.
Andrew: The DreamCells are those cylinders that go inside the mattress. So you’re not sealing the mattress until you shift those around?
Martin: So all the mattresses are zipper covers. They’re made to order. But then, the reason why we don’t seal it is because we want you as a customer, if you want to be able to change it down the road — I’ll give you a great example. My wife, when she was pregnant with each of our daughters, had to go from sleeping on her back, which is what she traditionally likes, to sleeping on her side. I went in and I rearranged the DreamCells for her so she could actually get a good night’s sleep when she was pregnant, and then I rearranged it back after our kids were born. That made a huge difference.
You maybe have an injury, any number of things, lifestyle change, your bodyweight changes, whatever. You may change your preferences. Why should you have to go out and buy a brand new bed. Think about yourself 10 years ago versus today. A lot of us are different over that 10-year period. Any number of things can happen. We want the bed to be able to change with you.
Andrew: I’m trying to see how much it would cost. The Wall Street Journal did a piece on you where I’m still seeing according to SimilarWeb that you guys are getting traffic from it. The bed combo or the option that they picked was $3,800 for the Supreme Queen, right?
Martin: Dream Supreme Queen, today I think it’s $4,500. We’ve changed some of the features on the power base. It’s a $4,500 purchase, $4,000 to $4,500 depending upon the bells and whistles.
Andrew: What have you learned about being a manager since you started this business, running a team?
Martin: I’ve learned so much, and then I also know there’s so much more to learn. As the company grows, it presents new challenges all the time. I think what have I learned, gosh, let me just pull a couple things out. I try and hire people that are smarter than me, that are better than me at the job that I’m trying to hire them to do. I’ve tried to really learn to give credit to team members and motivate them and excite them about what we come to work to do every day.
Andrew: How do you motivate them around sleep systems?
Martin: We don’t think of ourselves as a sleep system company. When we talk about our master motivating idea or sort of our core purpose, if you will, our core purpose is to help people live better lives through the power of good sleep. What that means is that we show up to work focused on how do I improve the quality of life for the Reverie customer and even non-Reverie customers that we want to become Reverie customers, for people in general? How can we improve their quality of life through better sleep?
Better sleep 100% leads to better health 100% leads to higher — there’s study after study that talks about this. It’s becoming more part of the mainstream knowledge base that we understand that better sleep leads to a higher quality of life. I think what we’re focused on is that, and the probably is a means to that. What we get fired up about are the emails, the calls, the testimonials where a customer says it’s what you talked about at the beginning, “This bed has changed my life.” That’s pretty powerful.
Think about it. I’ve got a young group of folks here, whether it’s in the customer service, the engineering team, these folks have other options. They’re rock stars. We try and bring in the best of the best. They can go somewhere else, and they can make more money because they’re really good at what they do. Ultimately, they’re here because they make a difference, and they get excited about what we do. If you’re helping people live a better life —
Andrew: I see. You’re making it about more than the product, but about the result of changing people’s lives.
Martin: That’s what it’s always been about. It’s interesting. When we sat down and we really tried years ago to figure out — it’s like, “What the heck are we all about?” It’s one of the things you run into as a company years down the road, “What is your core purpose?” and you have to sit down and think about it. That’s what came out of it.
We didn’t invent it to motivate people. That’s what came out of it. What we realized was, “This really motivates people.” We always try to bring people back to that. It’s not about bringing in dollars and cents. We have to do that. We’ve got to pay the light bills. We get it. It’s about having an impact.
Andrew: All right. You know what? One final thing that I’m curious about. I see that you sell these bed systems for thousands of dollars and then you also sell linens. How do you think about brand extension, product extensions? How do you know what to add and what’s not worth your time?
Martin: Well, I’ll tell you. One of the reasons why we got into linens is that a lot of folks were buying our sleep systems and having trouble finding linens for them because we had these slick king sleep systems. Now we have these dream top sleep systems where the head is split. You can’t find linens for that. You’d have to buy a set of king linens and a set of twin. Some of them, you can’t find them at all. So customers would say, “I love your product, I want to buy your product, but I can’t find linens for it.” We said, “Okay, well, clearly we have to offer linens for these folks.” That’s really want got us into that.
Andrew: I see. All right. Well, thanks so much for doing this. You must feel so much happier doing this than you would have had you pursued more of an academic career? You’re fully branded Reverie. Your t-shirt says Reverie.
Martin: I’ll tell you what. I love life. I’d like to think I’d be happy doing a lot of different things now, but I love what I do. I love the people around me. Like I said, man, I’m having fun. I’m going to ride it and enjoy it and have the time of my life no matter what I’m doing.
Andrew: I’m curious about why you’ve got a printer, such a big printer over your shoulder.
Martin: Great question. I’ll be completely honest with you. My computer doesn’t hook up to it. It’s kind of embarrassing. It’s just been sitting there for a long time.
Andrew: It’s just sitting there.
Martin: It’s decorative. The intent was that I’d be able to print directly from my printer, and I’m sure if I talked to IT, they’d come figure it out.
Andrew: It’s not like you’re still in such a paper-based world that you have to keep printing things out for clients.
Martin: No. It’s funny. I used to use our office printer a lot. I’m sure I’ve used this one at least once. I think it’s an old one from the office. I put it in my office and haven’t used it for a while.
Andrew: I see. Sometimes people look at my desk and they say, “Why is that printer there?” I say, “It’s not a printer. Actually, it’s a scanner.” I hate paper. I scan it immediately and toss it.
Martin: I’m with you. That’s how I try and operate now, although you’re smart because you don’t have your desk in view.
Andrew: I feel like having it in view is a good idea. I think you’re right. It gives more personality. I wish that people could see a little bit more, but I’m not willing to focus on that. I want to focus more on —
Martin: I’ve got a computer monitor back here as well. Clearly, I’m not too worried about the office environment, right?
Andrew: All right. The website is Reverie.com for anyone who wants to check it out. The two sponsors are the company that will host your website right. It’s called HostGator. And the company that will help you hire your next great developer, it’s called Toptal. I’m grateful to both of them and to you. Thank you so much, Martin.
Martin: Thank you, Andrew. Appreciate you having me on. Take care.
Andrew: All right.
