How a Startup Created the No. 1 Rated Mattress on Amazon
Tuft & Needle
When Daehee Park and JT Marino left the tech startup they worked for to strike out on their own, they looked for a different pace, perhaps something in an “old-fashioned industry” ripe for change.
They landed in mattresses.
The industry, dominated by the big S companies — Simmons, Serta and Sealy — was an unlikely target for two digital entrepreneurs. But Park and Marino, the founders of Tuft & Needle, borrowed a concept familiar to the tech world they fled: That it’s possible to make money producing a better, more affordable product by cutting out the middlemen and controlling prices.
On that foundation, their mattresses, which are sold directly to consumers from their website and on Amazon and come with high-touch customer service, have soared to the top ranks on Amazon.com. The company’s products are not only the highest-rated mattresses sold on Amazon, but also the highest-rated product in the online retailer’s giant furniture category overall. Tuft & Needle mattresses have received 188 five-star reviews out of 212 in total.
It is paying off as well. After generating $1 million in sales in 2013, the company’s first full year in business, Tuft & Needle’s revenue hit $500,000 in January and February of this year alone, and it is on pace to clear $5 million in sales by the end of 2014. It’s a drop in the bucket in the $7 billion dollar U.S. mattress sector, but it is a category that rarely sees five-times growth.
The company is also profitable, the founders said in an interview.
Park and Marino, who previously worked together at Los Angeles tech startup Mulu, turned to mattress-making in 2012 after Marino was disappointed by a $3,000-plus mattress. So the two posed as the owners of a small mattress store and called around to vendors to uncover the real cost of making Marino’s expensive purchase. The final calculation — a total of about $300 — confirmed their suspicions: There was significant opportunity to improve.
In 2012, the duo took $6,000 of their own money and went to work. Over the next year, they traveled to the Carolinas and Southern California, where they pitched foam and fabric companies on their vision for a lower-priced, higher-quality product.
“These guys were totally cold to the bedding industry but I listened to their vision about the product line and the passion in their voice and decided it was something I personally wanted to be involved with,” said the sales chief of the California foam company that Tuft & Needle works with. The company requested that names of its vendors be kept anonymous, because it said those relationships are part of the company’s secret sauce.
Tuft & Needle’s mattresses range in price from $200 to $500. They are thinner than most traditional mattresses, just five inches thick, and are made out of foam. That composition gives them a look that more resembles a futon than a regular mattress, but the founders say the density of the foam used, and the proprietary way in which it is layered, makes the Tuft & Needle bed one that should hold up for seven to 10 years of daily use. A 10-inch model is on its way.
Among the biggest challenges the company faces is convincing mainstream buyers to purchase an item sight unseen. The company sells mattresses through its own website, and also through Amazon, which takes a 15 percent cut and accounts for about a third of total sales. But Tuft & Needle mattresses are not sold in brick-and-mortar stores.
“The majority of people who want to buy from us, won’t buy from us because they want to see it and touch it,” Marino said.
The founders say they plan to eventually sell their products in physical retail outlets, but for now they are trying to overcome the obstacle with a customer-friendly return policy. Buyers have 30 days to return a mattress, and the company will pick up the returns at no cost. Its customer service reps proactively reach out to every customer after ordering, and encourage them to return the mattress if they are not thrilled with it and write reviews if they are. Less than three percent of orders have been returned, Park said.
Though they have fielded investment inquiries, Marino said they have put off discussions for now as they are profitable and growing. Instead, they are keeping their focus on finding new ways to leave their mark on a very traditional industry.
“This industry needed a shaking up,” said an exec at the company’s fabric vendor, a 35-year veteran of the industry. “It needed some new ideas that work.”