The Exchanges

Q Um, So you're at business school, and there's other smart people at business school like you, and I guess you approached two of your classmates, um, to kind of, to join you. David Fortune, Ben Hyman. Tell me the story. You went to them and said, hey, I've got this idea. Do you guys want to get involved?

A Yep. So first I approached Ben. Um, Ben had a background working in supply chain in Southeast Asia. He'd lived in China and in Laos and in Vietnam, and so he knew languages, and he knew how supply chains work. And I, At this point, I'd never been in a factory in my life, so I was like, oh, you've been to a factory? Like, help me out, you're in, is kind of, you know, if you're willing, um, and I, I pitched him on the idea, and he also kind of had an entrepreneurial bug, and so, yeah, he got in rooms with me, and was calling, and modeling, and helping in the, in those early days, um, and soon after, um, another weak spot was, um, Legal and accounting, and, uh, David is a, he's a JD MBA at Stern, so he'd practice law, and he was also an accountant in, uh, prior career, so we had, like, the three of us, plus Vicky's secret weapon of this public relations and pitching, I thought we had all the ingredients to at least get the foundation of a company going.

AI assessment note: “Yep. So first I approached Ben. Um, Ben had a background working in supply chain”

Q up, uh, my parents had a jewelry store. They're a small business, entrepreneurs, and I saw them struggle, even though they eventually did okay, and worked so hard, and that actually, I had the opposite reaction. I didn't want to do that because of all the, the struggle and the uncertainty that went along with it. But in your mind, you always thought, I think I want to do something?

A Always, always. My parents never had a boss. They were their own boss always, so that's the structure that I always was familiar with growing up, and I really liked that freedom of controlling their own destiny, and, um, that really inspired me, and I learned a lot. My father would leave at four in the morning every day to go to the deli, because he had to wait for the newspaper deliveries so they wouldn't get stolen. It was in Newark, New Jersey was where his deli was, and he would close at six p.m. Be home by six 37 o'clock, and to be honest, he'd be in bed by, by eight, eight 30, so, so it wasn't a lot of time to spend with him every day, but he worked hard, and I mean, we weren't the richest people, but I was a very, very happy kid, and you know, my, my parents definitely made it happen.

AI assessment note: “Always, always. My parents never had a boss. They were their own boss always”

Q What were you learning about sheets that, I don't know, basic common sense wouldn't have already informed you?

A I think the two findings that were most eye-opening was the misinformation around thread count, because, you know, if I was gonna call a factory, I was gonna say, and I want a high-quality product, um, what I would have done is said, what's the highest thread count you make, and send me samples of that, but that is just fundamentally wrong. Um, as it pertains to sheets, Thread count is actually the number of threads vertical plus horizontal in a square inch of fabric. So there's actually a finite amount that you can have, like it's a finite amount of space. And that number actually with true single ply yarns, um, is about, you know, four or 500 or so in a square inch. Anything beyond that is just marketing essentially and tricks by manufacturers to, to really attract the consumer to some number. That they could anchor them and think that, hey, it's better because it's more. Um, but the funny part is, is that as that goes higher and higher and higher, that number, um, anything in excess of 500 is essentially is a inferior product. It's more dense and less breathable.

AI assessment note: “two findings that were most eye-opening was the misinformation around thread count”

Q And, and just out of curiosity, you raised 236,000 dollars from Kickstarter. Some of that went to Kickstarter. The rest of it, you had to pay to manufacture all this stuff. Um, how, how close were you to running out of money?

A I mean, we were, we were out of money. We were over, like we, we didn't, we had to make it work somehow, and we, we kind of were constantly shuffling the deck. Um, it took, I got back on a plane alone to go back to the factory in, in Israel and talk to them, and I said, hey, we want to scale this thing up, and ultimately I convinced them to front us the inventory without paying and give us, you know, some sort of favorable terms, and I said, I promise you that the next order will be twice as big If you just give me time and the flexibility to sell this down, just take a chance on me because it's pretty small at this point. And, and they did, they believed in me and they, they sent it without us sending them a dollar.

AI assessment note: “I mean, we were, we were out of money.”

Q Meantime, Rich, you start business school, and, um, and do you continue to think about cheats when you get to business school, or do you kind of hunker down and do the business school thing?

A A little bit of both. Uh, another thing happened at the time that, that kind of got my gears turning, um, as I was preparing for recruiting and interviews and business school, I got myself a new suit and someone referred me to this, uh, custom suit manufacturer, uh, in the city. And it was a great experience. You go up into the showroom, they show you all the fabrics, you choose, um, what type of fabric, the design, and they, they custom fit it to you. And I never had that experience before. Mm-hmm. So then, you know, I circled back to the sheet idea and, you know, was thinking about a new sheet concept where you can customize your own bedding ensemble. And that was like really where there, I thought, okay, maybe there's some sort of interesting business idea around that. Um, I thought it was a good opportunity to kind of put pen to paper, but the turning point was January, 2013 when I was on my winter break between my first and second semester. I was home with Vicki, um, And I remember telling her that I was kicking around this idea for the first time, actually, like, I'd heard for years, that's a stupid idea, that's a stupid idea. This one, she was kind of like, you should just go for it, that's actually a really good idea.

AI assessment note: “A little bit of both. Uh, another thing happened at the time”

Q feedback, would have been a suitcase that nobody wanted, because it would have had everything on it, and it would, you know, all the bells and whistles, and it would have looked like a Frankenstein suitcase. So how were you able to look at the data and the trends and say, okay, this is actually, looks like people really want this. What, what was the this that you were seeing?

A So the feedback we got was, um, I don't know, I need new sheets. Um, I guess I would just come here. What brand do you love? I don't know. I don't know any brands over here. How much are you willing to pay? Um, I don't know, a hundred bucks or so. People didn't really think about, you know, where does the cotton come from? There's all different kinds of cotton, whether it's Pima cotton, Egyptian cotton, um, Turkish cotton, and so on. Like, they all feel differently. All the different weaves that you have, if it's a jacquard weave, or percale weave, or sateen weave, there's so many variables, and nobody knew the information, so I wish there was a better solution. It's kind of what bubbled up to the top.

AI assessment note: “nobody knew the information, so I wish there was a better solution.”

Q Got it. Um, Rich, I guess at, at, at a certain point, you, I mean, you're, you're doing work, um, you're involved with major league soccer, and kind of pursuing this thing that you're really passionate about, and you decide to apply to business school. Um, why? Why, why did you decide to do that?

A I mean, I came from a family of entrepreneurs, um, you know, albeit small businesses. Um, so, I very much had the itch to do that. Um, I always was kind of in business. Um, I remember in middle school and high school, I was, um, buying and selling concert tickets and sporting event tickets. Um, these were in early days of like eBay and, and whatnot. Um, I was always trying to, trying to make a little money, always had a job, but I was just trying to find my path really. Uh, and it just, I thought I would take my GMAT and kind of see where I could land after that and if it would be a worthwhile path to pursue.

AI assessment note: “I thought I would take my GMAT and kind of see where I could land”

Q That's amazing. I, I, what, what I'm wondering about is when you, when you launched, right? I read that you actually sold out a seven month inventory in four days. Like there was a clamor for this.

A Yeah, we built up a lot of buzz ahead of launch. You know, we're launching next week. We had a landing page. We had a countdown. We had a lot of stuff. We tried to just, you know, bottle up as much of what we could, and then, and then execute as soon as we went live, and we spread the word, and Vicky, you know, wrangled all the media and had them lined up to go live, you know, right when the site did, and all in, on concert, and we just blasted through our inventory, and it was, it was a really funny moment, because We were so excited that we had, you know, a few hundred orders, and we're high-fiving and celebrating, and then we realized we had no more inventory to sell for the next month or two. We had nothing on order because we didn't realize how, like, replenishment works and forecasting and different things.

AI assessment note: “we built up a lot of buzz ahead of launch... blasted through our inventory”

Q Yeah. Um, what if sales, like, really, really dramatically declined for six months? Um, are you going to be okay?

A We're going to be fine. Um, thankfully, you know, we don't have a big part of our business that's exposed to our brick and mortar stores or to wholesale channels. We don't sell in the big box stores or the department stores, which are clearly suffering as a result of this with people not going out. So our business is mostly single channel e-com and, um, you know, this is a lot of people are at home, you know, and thinking about their home environments and, you know, their, Their comfort from their workspace or their bed or wherever it is. So it's not like we're going to fall off the face of the earth. Um, obviously as a CEO, I'm always thinking about the worst case scenario and what if, but it's not something that's like newly keeping me up at night in light of this stuff.

AI assessment note: “We're going to be fine. Um, thankfully, you know, we don't have a big part”

Q bootstrapped this thing. And in March of 2017, you actually went out and raised Ten million dollars from VC firms who I'm sure were beating down your door. Maybe some of the same firms who were kind of, ah, you know, giving you the cold shoulder or just dismissing you just a few months before. Why did you decide to take outside money at that point in March of 2017?

A We kind of had to. We were a victim of our own success at that point. With the demand rising, we had to buy into more inventory. We were expanding our product mix. So at that point we had Multiple lines of sheets. So we had launched our Lux line. We'd launched comforters and pillows, and you got to buy into all these different supply chains. We were also still six or seven people at that moment. So, you know, kind of doing whatever we could and everyone's wearing a lot of hats. I had one of those critical moments actually also that, that stood out in my mind at a time when I had trouble fundraising until we kind of hit our stride. Um, I passed Neil Blumenthal from Warby Parker, who I don't know.

AI assessment note: “We kind of had to. We were a victim of our own success at that point.”

Q is like the X-Men here, and X-Women, I should say, the Avengers. You've got the accounting, you've got the PR, you've got the marketing. All right, so, Um, so you start, uh, really kind of, I don't know, I mean, were the, were the sort of the four of you or just kind of meeting up and just kind of grinding through ideas, um, like at night and on weekends?

A Yes. So we did a few things. So, um, we would go to fabric stores around the city. Um, we'd cut fabric and, um, send them out to factories to try and replicate. But the most important thing we actually did was we went and we surveyed about It was really by hand and live, so we went to, first we went to, like, the big box stores and the apartment stores, and we would just nag people in the betting section and say, hey, you have a second, um, a lesson we learned is, uh, easy way to disarm somebody for a quick survey is, um, let them know it's a student project, and it very much was at the time, so.

AI assessment note: “Yes. So we did a few things. So, um, we would go to fabric stores”

Q How could you sell those in Spain or in Mexico? It would just be called sheets.

A Yeah, that's kind of what we thought also. It didn't really work so well. Um, but Vicky and I went, and we met somebody at a party, uh, at some point, and, you know, she was kind of like, oh, what do you guys do? And we said, Oh, you know, we have this business based in Brooklyn, and we're making linens, and she's like, oh, Brooklinen, that would be great, and we're like, Interesting. You know, that's, you know, we're looking for something that's a unique word. Um, we also thought, you know, this is where we are. We were working out of David's apartment in Brooklyn at the time for the most part. Um, so there was something to who our customer was here and the branding and our taste that could be useful to kind of hook the brand onto.

AI assessment note: “Yeah, that's kind of what we thought also. It didn't really work so well.”