The Ledger
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Discounting Tempur-Pedic pillows to $30 would have hurt sales
“I think if you sold it for 30, you'd sell less.”
Trussell: Tempur-Pedic would have sold fewer pillows at $30 than $90
“I think if you sold it for 30, you'd sell less.”
Trussell leveraged a Sharper Image deal to force Brookstone to stock mattresses
“So I started selling to Sharper Image. Their arch rival. Brookstone had an absolute cow about that, and they called me, Mike Anthony called me, and he said, Bob, we want you to not to sell to Sharper Image. It's going to hurt our business. And I said, okay, I'…”
Trussell: Founders should prefer 5% of something big over 51% of something small
“Well, my philosophy is the opposite, is I'd rather have five percent of something really big than 51% of something small. And so my advice is, okay, you'd always like to control it, but you don't have to.”
Trussell: Founders are more equipped for entrepreneurship at 40 than at 20
“I think you're more equipped for that when you're 40 than when you're 20.”
Trussell leveraged Sharper Image rivalry to force Brookstone to sell mattresses
“I started selling to Sharper Image, their arch rival. Brookstone had an absolute cow about that, and they called me, Mike Anthony called me, and he said, Bob, we want you to not to sell to Sharper Image. It's going to hurt our business. And I said, okay, I'll …”
Founders should prefer 5% of a big company over 51% control
“Well, my philosophy is the opposite is I'd rather have five percent of something really big than 51% of something small. And so my advice is, okay, you'd always like to control it, but you don't have to.”
Private equity investors made 10x in under a year on Tempur-Pedic
“It turned out to be one of the all-time great private equity deals for them, and then they took us public three months later, so it was like they didn't even have their money up for a year, And they made like, 10 X.”
Trussell would have sold Tempur-Pedic to Sealy in early 2000s
“All those years back in the early, I mean, late nineties and early 2000, I was expecting to get a call from an industry player like Sealy. Guy Raz: To say, hey, we want to buy you out or something. Bobby Trussell: Yeah. And we would have said, Okay.”
Trussell: Market expansion success depends primarily on the local manager
“You're only as good as the guy you got there. If you have a good guy in Spain, Spain's gonna do great. If you have a marginal guy, Spain's not gonna do well. So if you can get comfortable with the guy, and then, yeah, have the handbook, and have the rules and …”
Trussell: Competitors entering your niche expands the overall market
“And the fact that competition comes in, that can be a positive thing, because what you want is your niche to get bigger. Right? You don't want to be the only fish in the pond. So what happened with us is people copied us or tried to, but they didn't do it as w…”
Bobby Trussell: National Ads Cost Much Less Per Capita Than Local
“National ads are much cheaper per capita than local ads”
Dan-Foam swapped a $75,000 container debt for 10% equity in Tempur-Pedic
“We will swap that container for 10% interest in your company.”
Sealy, Simmons, Serta, and Spring Air sold undifferentiated commodity mattresses
“It was dominated by the four S's. Seeley, Simmons, Serta, and Spring Air at the time, and they all were Innersprings, and they didn't even try to differentiate as a product. It was a commodity, and they sold on price and terms.”
Private equity sponsors made a 10x return taking Tempur-Pedic public quickly
“It turned out to be one of the all-time great private equity deals for them, and then they took us public three months later, so it was like they didn't even have their money up for a year, Wow. And they made, like, 10 X.”
Trussell: Taking entrepreneurial risks is not risky when you have nothing
“You have to have the ability, though, and the mindset to take risks, but when you don't have anything, it's not so risky if you think about it.”
Tempur-Pedic foam was originally invented by NASA for astronauts
“Yeah, it was originally invented by NASA. For the space program to cushion the astronauts from G-forces, and since it was a public thing.”
Trussell secured North American distribution rights for Tempur-Pedic in 1991
“Late 91, and we met him in Milwaukee, and he and I negotiated that he would give me exclusive North American distribution rights for his products.”
Direct mail to chiropractors drove $300,000 in first-year Tempur-Pedic sales
“So, we got 25% of them to buy four pillows, and that was the major breakthrough that turned us out of the nosedive And so all of a sudden from that 500 chiropractors, we had a 125 of them who were buying four pills a month, and we were selling it to the chirop…”
Tempur-Pedic grew revenue from $300K in 1992 to $45M
“We did 300,000 in 92, then 2.6 million, then six and a half, then 13, then 28, then 45.”
Adding an 800-number dropped New Yorker ad costs from $25K to $6K
“And then one day I got a phone call from the New Yorker, our first magazine, and he said, you know you guys have an 800 number. That means you, you're eligible for direct response rates. I said, oh, okay. How much is that? He said, 6000. I said, I've been payi…”
Trussell: Mailing 500 chiropractors secured Tempur-Pedic 125 initial distributors
“We mailed the 500 chiropractors and 125 of them. Took up our offer of which our, which was, this pillow is yours free if you order four, so now we have a 125 distributors.”
Trussell: Tempur-Pedic raised early seed offering 4x payback plus 1-2% equity
“We didn't want to give up equity, right? But we were okay with giving up some, so we gave for, if you give me 50,000, I, you'll get either one or two percent equity in the company, and a four-to-one payback On your money. So you give me 50, I'll give you 200 p…”
Bobby Trussell: Tempur-Pedic Became Brookstone's Number One Product
“When we were selling to Brookstone that was one of our big breakthroughs. They were a major retailer, and we were, became their number one product”
Trussell was approximately $1 million in debt before founding Tempur-Pedic
“I was probably a million dollars in debt.”
Tempur-Pedic's memory foam was originally unpatented public domain NASA technology
“Yeah, it was originally invented by NASA. For the space program to cushion the astronauts from G-forces. And since it was a public thing... U.S. Government. There wasn't a patent on it. It was freely alienable. And my Swedish friends bought a company in Denmar…”
DanFoam tested memory foam in football helmets before discovering mattress applications
“They had this squishy, squishy foam with slow comeback, and they had originally been interested in it for football helmets. But they made some three-inch overlays, and they put them in a nursing home in Copenhagen, and they were thinking maybe it would be good…”
Trussell raised about $500,000 to launch Tempur-Pedic distribution in the US
“Well, it was undefined, but I was supposed to raise what is needed, so I raised about 500,000 dollars.”
Trussell: DanFoam required selling 10,000 mattresses in year one for exclusivity
“The other condition was we had to sell 10,000 mattresses to The first year in order to maintain exclusivity.”
Tempur-Pedic missed its 10,000-mattress first-year sales goal by 9,930
“We were supposed to sell 10,000 mattresses the first year, and we sold 70. So we missed the goal by 9930.”
Trussell: Tempur-Pedic mailed 500 free pillows to chiropractors to spur initial sales
“So we mailed 500 pillows to 500 unsuspecting chiropractors.”
Trussell: 25% of sampled chiropractors converted to buying four Tempur-Pedic pillows
“So, we got 25% of them to buy four pillows, and that was the major breakthrough that turned us out of the nosedive”
Tempur-Pedic became Brookstone's hottest-selling new product within two weeks
“Within two weeks, we were the hottest selling new product in Brookstone.”
Trussell: Tempur-Pedic Swedish partners ended up owning 45% through equity-for-product swaps
“Well, that 10% interest that they swapped for that container of pillows, we had to do that four more times. So they ended up owning 45% of my company. So me and my U.S. Investors, we owned 55.”
Trussell: Tempur-Pedic grew revenue from $300k in 1992 to $45M
“We did 300,000 in 92, then 2.6 million, then six and a half, then 13, then 28, then 45.”
Tempur-Pedic had 25,000 chiropractors selling its products in the US and Europe
“We had 10,000 chiropractors selling it, and of course they had another 15,000 chiropractors selling it all over Europe.”
Trussell: US distributor drove 60% to 65% of Swedish manufacturer's global sales
“We were 60 to 65% of their world sales. So their company was only valuable pretty much because of that contract.”
Trussell: Tempur-Pedic's $350M buyout funded Swedish exit, not company operations
“So anyway, that's what the three hundred fifty million was. The purpose of the transaction was to take the Swedes out. Not a ton of it went into the company, actually.”
Trussell: Tempur-Pedic triggered a $50M PE performance equity kicker
“Ah, there was an equity kicker involved that if we hit certain numbers, we would get another fifty million, which they didn't really think we'd hit, but we blew the doors off and we hit it quite easily the next year.”
Trussell: Tempur-Pedic held 5%–6% of the US mattress market at IPO
“We were probably then about you know, five, six percent of the U.S. Mattress market, but we were A much larger percentage of the 2000 dollar and up price point.”
Gainesway Farm bought Kentucky Derby favorites for $10M pre-race
“We were buying Kentucky Derby favors for ten million dollars a month before the race.”
Trussell raised $500,000 to launch Tempur-Pedic in North America
“Well, it was undefined, but I was supposed to raise what is needed, so I raised about 500,000 dollars.”
Tempur-Pedic distribution deal required selling 10,000 mattresses in year one
“The other condition was we had to sell 10,000 mattresses the first year in order to maintain exclusivity.”
Tempur-Pedic sold 70 mattresses in year one against a 10,000 quota
“We were supposed to sell 10,000 mattresses the first year, and we sold 70. So we missed the goal by 9930.”
Trussell traded 10% of Tempur-Pedic for a $75,000 product shipment
“So next day he calls back and says, ok, here's what we'll do. We will swap that container for 10% interest in your company. . Tempur-Pedic. And I said, ok.”