The Growth Framework That Helped Brooklinen Build a $10 Million Business
by Felix Thea Podcasts Jul 14, 2016 40 minute read Leave a comment Email Pinterest Facebook Twitter LinkedIn
Rich Fulop is the co-founder of Brooklinen, a store that supplies simple and beautiful bedroom basics delivered straight to your door.
On this podcast, you’ll learn how Brooklinen’s founders created a testing framework that helped them grow a $10 million business.
In this episode, we discuss:
How to survey people in person to validate a product or business idea.How to differentiate yourself in a competitive marketplace.How to find and hire people that are smarter than you.
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Store: BrooklinenSocial Profiles: Facebook | Instagram | TwitterRecommended: SurveyMonkey, Qualtrics, Rapportive
Felix: In this episode, you’ll learn how to survey people in person to validate a product or a business idea, how to differentiate yourself in a competitive marketplace, and how to find and hire people that are smarter than you. Today, I’m joined by Rich Fulop from brooklinen.com. That’s B-R-O-O-K-L-I-N-E-N dot com. Brooklinen supplies, simple and beautiful bedroom basics delivered straight to your door. It was started 2013 and based out of Brooklyn, New York. Welcome, Rich.
Rich: Thanks, Felix. Happy to be here.
Felix: Awesome. Yeah, glad to have you here. Tell us a bit more about your business. What are some of the most popular products that you sell?
Rich: Well, we started the business just around bed sheets. My wife and I started the business as purely based out of personal experience. We moved into a new apartment, necessitated buying new sheets and pillows. We went to the Big Box Store. I really just hated the experience there. There wasn’t a lot of information. It’s very confusing. At that point, there was a lot going on with direct-to-consumer brands. We felt like there was a void here, in the market, for bedroom products. We didn’t really have much interest in getting into the mattress game. It was more of the sheets and pillows, which were expression of personal style and comfort. That’s really what we wanted to go at with a very, very premium product at an accessible price, was really our mission from the get-go.
Felix: Yeah, this whole direct-to-consumer thing is definitely something I want to dive into a little bit deeper. It’s funny, you and I are both from New York. On the subway, on the trains, you see ads all the time for so many direct-to-consumer products in home space and everything. It’s definitely starting to come much, much more popular.
You said you saw a void that there was in this market place. Obviously, you and [Vicki 00:02:36] didn’t enjoy the experience, of the retail experience that you had gone through, so you decided to start a business. What are really the first steps towards that? Because people out there, they’re listening, might be like and thinking, “Yes, I see a void. I also have a pain or an itch that I want to scratch myself. What are the very next steps to take?”
Rich: We took a very unconventional route, especially when you compare us to all the other direct-to-consumer brands out there. I was in business school at the time. I was at NYU. My wife was working in public relations for an agency, right when this was going on. In our spare time, we shopped at, albeit, Everlane or Warby Parker or Harry’s, and there was just nothing going on here. That’s when we saw the opportunity. At the same time, while I was in school, the opportunity cost to really go after this and pursue this idea was very low, because I didn’t have another job that I had to set aside. I had access to all of these resources of all my professors and a network with students that were really either connected or experienced or knowledgeable about different areas. It fed into the whole narrative of, “Why not just go for it and see what happens?”
I can’t even tell you how many people told us we were crazy or stupid. “Who wants to get into the bed sheets business in 2016?” Yeah. We’ve proven them wrong pretty much every step of the way. Kickstarter was really the first way to validate the idea.
Felix: Makes sense. You had this background or connections with your school and everything. Did you already have experience launching businesses in the past, or was this your very first entrepreneur project?
Rich: Vicki and I, neither of us had any kind of experience starting a business. We always had an itch we wanted to scratch. We always envisioned ourself starting our own company, a brand that we can really tailor to our own taste and run the way we wanted. We’ve both been part of companies that had company culture that we didn’t love so much. We really had ideas of what we would do better. It was really just we wanted to pursue it and just went for it.
Additionally, I can’t tell you how many people told us, like I said, we were stupid and crazy. Almost every investor turned us down. I could say every institutional investor turned us down from the get-go. That’s why we had to turn to Kickstarter to really validate the idea, to get that first capital in the door. We really started the business on a hunch and about $25,000. Then, that went towards Kickstarter video, narrative, prototyping the products, and just getting the wheels turning at the first stage.
Felix: Yeah. This situation that you’re in where you told people about the idea, whether it be investors or friends or family, and they told you you were stupid and crazy. Why didn’t you listen to them? How did you know to continue to pursue this dream or goal of yours, even though everyone you are talking to is saying that it was a bad idea? Before you answer, it’s a common step that people take or suggest that entrepreneur’s take is to try to validate the idea, right? Go out there and at least talk to people. Ideally, find more ways to measure the buyer intents beyond just talking to them. You start off by talking to people, and they said it was a bad idea. How come you continued to pursue it anyway?
Rich: Felix, we just had a hunch in our gut, where we knew that there was a need for the product and there was a critical mass out there. We just had to find them with the right product market fit. If we could figure out a marketing and get it in front of the right people, then the rest … It was a great quality product. You can’t stand behind a product. It’s very, very difficult to sell and have true believers and evangelists, if the product isn’t great. That’s the most important thing. We knew people were out there.
First and foremost, everybody has bed sheets. We knew that there was a humongous market for it. It’s super fragmented, so nobody really knows what brand they’re sleeping on, prior to this. If you were to rewind to 2 years ago, before this whole craze started, people would go to their designated channel, albeit The Big Box Stores, department stores or Amazon, and they’ll just buy whatever fits their price and sounds good. They don’t really have any knowledge. We thought if we could stick out from the crowd with a better value proposition in front of the right people, then we could differentiate ourselves.
What we actually did was we took the pen and pencil. We went to those stores, those locations, and we interviewed people on the spot. On the sidewalk, in the stores. “What are you shopping for? How much are you spending? What are you looking for in a product? Why here?” It was quick. It was about 30 seconds. Then, we’d just move on. Just to get that validation of what people wanted. We knew it. We did about 500 people. We kept hearing the same things over and over. That really gave us the courage to go and pursue it further.
Felix: I definitely see the hustle that you guys had to go through. Talking to 500 people is something that a lot of entrepreneurs, or people that want to become entrepreneurs, don’t even think about doing, because it sounds so daunting. I think you were hinting at this earlier about how the market at the time was very, just at that time, 2 years ago, was very commoditized. People didn’t know what they were buying. Me, myself, I’m definitely guilty of that. I’ll walk into Bed, Bath and Beyond. When I am shopping for stuff, I’ll feel it, I guess, with my hands and the price matches my budget, I’ll go ahead and buy.
When you see that, that attracted you to the market rather than made you afraid of the market?
Rich: Definitely. Bed, Bath, and Beyond is a publicly traded company. You can see what their numbers are like. It’s huge in this space. A very, very small sliver of their business is actually online. Most of it’s in brick and mortar. The opportunity lied, for those types of household products, are online. There’s no doubt that’s where all the consumers are going in the future, particularly millennials.
I am a very, very big believer in having specialty brands. I think the future of commerce and e-commerce is brands like ours, or the Warby Parker’s for glasses, and so on. It’s you do one thing or one group of things and you do them really, really well, and you’re the expert on that. The markets are going to get sliced up into these- Rather than these big department stores, they are going to be these micro brands that have a lot of expertise. There was nothing in this space. There was a lot of opportunity there, with millennials and with shopping patterns, which was a signal to us that there could be something there, for a lot of money.
Felix: You think that this kind of business model could be replicated, if you just look for markets that are doing really, really well, but mostly in the off line world? Millennials are now making money. They are coming into a point in their lives where they have careers and are ready to spend money on products. They are going online first. That’s an opportunity that you could potentially … Not necessarily replicate the exact business that you have, but at least be the genesis of an idea, that’s similar to the genesis of the idea for you guys?
Rich: No doubt. I think the market has to be big enough. We pursued a market that is huge. It’s something everybody has. The way we look at it is, almost everybody in the room, or in the building, wherever you are, is going to buy sheets at some point. Statistics say it’s going to be in the next 24 months, is the cycle for people to buy sheets. At that point, they’re going to do exactly what you did. They are going to go to Bed, Bath, and Beyond, walk in. Then, the last thing they want to do is go back to Bed, Bath, and Beyond. They’ll buy whatever looks best at that moment and walk out. It’s about staying relevant and getting in front of them. It’s kind of like Inception, the Leonardo DiCaprio movie. If you can implant in their mind that they need this, and you have a better product than the rest, and they don’t have to go to the store, then it becomes a no brainer to make the purchase for them. It’s more convenient. It’s higher quality. It ticks every box.
Felix: Yes. Let’s talk about this a little bit more. I’d love to hear your explanation on how you … This obviously can uprise a huge conversation, but I want to ask anyway. How do you position yourself in a market place that is commoditized, a market place where people are like me, that was going into a store and just buy whatever is out there, not really understanding what kind of brands are out there? How do you position yourself as the premium brand that people should, not necessarily go out of their way, but I guess take a risk on and purchase from them for the first time?
Rich: What differentiates us from the get-go, for instance, from some of the mattress companies, for example, is that we are a brand. We want to be a lifestyle brand from day one. We didn’t want to be the Brooklinen sheets. We want to be Brooklinen, the brand. This brand stands for a certain lifestyle, a certain quality. You could see it in our photography. Our photo shoots are very real. We use real people that are here from Brooklyn. All are millennials. We shoot them in lofts, here in the city, that have a very certain look. It’s an aspirational lifestyle.
That’s not something that’s ever been pitched really in this product, prior to us. It’s always, “Carpeted room in a house someplace that’s very set up a certain way.” When the reality is most people don’t live like that. They can’t see themselves in the product. If you can have them visualize themselves in the product, and they love it, and its aspirational for them, then it makes it a lot easier to connect with the customer. That’s part of the whole website strategy as well, of appealing to that demographic. We know who are customer is, and we’ve tailored the whole experience around pleasing them.
Felix: Yeah. I love that. I think it’s worth repeating, is that if you are in a commoditized market or you’re in a market where there’s really no strong brand out there … The prose that you guys have taken is to turn it into more of a lifestyle brand. Make an aspirational lifestyle for your customers, that if they purchase your products, they could live a particular lifestyle, that you represent in your website and your social media. Make it aspiration for them, so that they feel like they have to have this product. This specific product, not just to have bed sheets in general, but to have a Brooklinen product. I think that’s a really important point. I think you hit right the nail on the head.
One thing you say, talking about a little bit earlier was about how you overcame the objections from investors and people that you talked to about your product, because you had a feeling that there would be a product market fit. Can you talk to us a little bit more about this? For anyone out there that might not know, what is a product market fit? How do you determine if you have it or not?
Rich: Yeah. It’s actually quite hard to describe in a few words. I think it has to do with aligning the brand, the vision, the price of it, and the quality, and the pitch, all to the market that you are positioning it towards, that is obviously big enough to serve. I wouldn’t recommend an entrepreneur to go after a market that’s very, very, very niche and very small. In order to cater to a market, you have to tick all the boxes.
Our price point, the way we really- I can actually give an anecdote over here. The way we approached it is, after doing those interviews, we kept hearing the same numbers and the same type of experience that people wanted to have. It made it quite easy to figure out how we had to position the product to them. If we kept hearing from people, “Yeah, I spent 70 bucks, but if it was a really cool brand and it was really awesome quality, I’d spend 100 to 150 bucks. Anything more than that’s probably a tough decision. I have to do more research.” We kept hearing that and hearing that and hearing that. We were like, “Okay. We’ve got to position the best product we can, no matter what, in that price range.” That’s what we did.
Then, from that point, we backed into, “What is the best product we can offer at that price, so it fits for that customer?” Rather than, the other approach would be, “Let’s just buy the best product and serve it up, and see how many people buy.” Then, it’s a little bit more of a gamble. We did our homework first, so we knew what we were getting into.
Felix: Yeah. Going back to the survey thing, I think is a great first step that you guys took. You surveyed 500 people. You listened for patterns, listened for the same terms, listened for the same price points that come over and over again. Do you think that if someone doesn’t have the- I don’t want to say opportunity, but maybe they are in a market where it’s harder to reach these people in person. Could you replicate this kind of survey online, too, or do you think it’s only possible to do in person?
Rich: I think it’s better in person. It really depends on the business. I think there’s a lot of tools out there, like Survey Monkey or Qualtrics, coupled with social networks that make it very accessible. What we found is you just have to be really, really humble about the approach and ask people. Recognize that they are doing you a favor. “This survey will only take 30 seconds tops. I really appreciate it. I am doing it so I can launch this business.” People will probably roll their eyes and be hassled by it, but if you bug them just to get the information and you’re humble about it, then they’ll do you a favor.
It is really, really important to go to friends and family for that kind of information to get honest information. Hopefully they could share it and open up their networks, then you get that whole network effect, as it branches out. We did that also. In addition to going out on the streets, we used Qualtrics to survey people out via Facebook. We just asked friends to share and share and share. It just got wider and wider and wider. We got a few hundred more that way to couple with our in person interviews.
Felix: Yeah. It sounds like you want to make these surveys, these questions brief. Like you were saying, you could be inconveniencing people. You don’t want to take up too much of their time, because they are doing you a favor. In that short period of time, how did you decide what questions were most important to ask?
Rich: That’s a tough question.
Felix: Maybe, what questions did you ask?
Rich: Oh, geez. This was nearly 3 years ago. This was the end of 2013, before we even decided to get moving to do Kickstarter. It had a lot to do with pricing and shopping habits. I didn’t want to ask leading questions, that “I’m starting a bed sheets business and this is what I want.” Then, people will tell you what you want to hear. You have to skirt around it a little bit to be more strategic. “Do you shop online? Do you buy your clothes online? How often do you shop online? Have you ever bought home goods online?” You kind of got to get closer and closer and closer. They won’t know we were going with this until the very end, but you’ll collect enough information. It’s all about frequency, recency and pricing, I guess, are the most important. You want to sell a product that people will love and will want to buy again and again and again, so you could keep them as customers for life.
Felix: Yes. I think one thing you said that is really important there about creating these surveys, is that you don’t want to ask leading questions, because people, in general, when they are approached by strangers or friends, they want to do well in the conversation. When you start asking the questions, they want to give you the “right answers” to please you, essentially. When you do start out asking leading questions and give them a hint of where you are trying to go with it, then, of course, the answers are going to be biased. I think that’s exactly what you are getting at. That’s why surveying is definitely very tricky. I think there is tons of information out there on how to survey correctly. I think you hit the nail on the head about trying not to- Try to be a little bit vague in your actual goal, at the end of the day, so that they don’t know where you are trying to get with it.
Rich: Yeah. Just one more note on the surveying. You have to also condition yourself. It’s very easy to have thin skin and when somebody tells you something that is not necessarily great, or that you didn’t think of that you’re going to go and optimize towards that. If somebody said in my survey, “I won’t spend more than 20 bucks on sheets.” A natural human reaction would be, “Oh no, there’s people out there that won’t even bother spending more that 20 bucks. We’ve got to go cheaper and cheaper and cheaper.” You’ve really got to block out the noise, on both ends of the spectrum, to really get the true pulse.
Felix: Makes a lot of sense. Because this was your first business for both of you, what were some big skills that you had to learn immediately? The business has only been around for less than 2 years. I can’t imagine that’s that much time to learn a lot of things. I am assuming that you had to pick up a lot of skills quickly. What are some of the things that you had to learn?
Rich: Oh, geez. Digital marketing. That’s the most generic in general term. Customer acquisition, in general. A lot of people tend to think, myself included, “You have a great product. If you build a great looking website, people will come, and you’re going to sell millions of units.” It doesn’t really work like that in reality. Having new strategies to acquire customers and drive traffic to the site, is definitely the hardest piece to learn with no prior experience, and to do that efficiently. I like to say, “It’s not a magic trick to sell a dollar for 80 cents.” It’s easy to throw money away and do that and get people to the site. To do it efficiently, in a responsible way that you’re actually making money, is very challenging. That was the most challenging piece, of how to layer the pieces on top of the site to make that most efficient.
Felix: Yeah. Customer acquisition, that’s definitely- If you have that skill, you have a business essentially, right? If you’re able to acquire customers profitably, efficient, like you say, you have a business. If you had to start over, what’s the fastest way to learn how to acquire customers?
Rich: Well, be humble and ask a lot of questions. I take a lot of time. A big part of my work week is networking and having meetings with other entrepreneurs, other CMO’s and DCEO’s, just to learn different strategies, what’s working, what’s not working. “How can we help each other?” You just get tidbits. You get a little nugget from somebody everywhere, even in other industries. You just have to figure out how that could help your business and put it all together, is really the part that goes on top of the website to make it better and more efficient continuously. It really never ends, is the honest truth, which is the challenging part.
Felix: Yeah. No, for sure. There’s just so much information out there. How do you personally filter what is actually good advice versus what could be- Not necessarily bad advice, but bad advice for your situation and for your company?
Rich: As I said, at first, we did not get any institutional funding to start the business, we boot-strapped it. Which, in hindsight, where we are now was the best thing that could have ever happened to us. Obviously, you feel desperate at that time and as you need it, everybody’s getting VC funding. It’s all you hear about and read about in Mashable or TechCrunch, but it’s not the most important thing. What it actually taught us was how to be very responsible, and how to be very efficient and test a lot, in terms of- Use data. That’s the most important part for us. We test everything. Anything anyone tells me, I will give it a shot with a small budget and see what happens. If the numbers dive- We have a marketing model where it looks at CPM, CPC, CPA, that all backs into each other and conversion rate, so we know if the strategy will work or not. We’ll test anything. Yeah, it’s really about testing, testing, testing, until you find what works in your potion.
Felix: Yeah. I think that that’s definitely the great approach. Testing everything, testing all your hypotheses, and then, of course, actually being able to attract all of this. Can you give us an idea of how to set something like this up? Maybe, do you have an example of something in the past where you did tests? How did you set up the test? How did you track the data?
Rich: Yeah. There’s tons of times I could do it. You have these conversations with other founders at different stages. The ideal scenario is talk to somebody that’s just one step ahead of you, that’s done this before, so you could get an idea of what works and what doesn’t work. Anecdotally, I’d say the first thing out of the gate, that changed the business at the first level, was email.
I wasn’t a big believer, I’m actually not very receptive to marketing emails myself, but it’s the most important thing for an e-commerce company, without a doubt, is having a good drip campaign and really making the most of a lead to capture. You start off with tools that are cheap or free, like a MailChimp, and the free pop-up window, some of the $10 apps that you can get. Then, you capture emails. You test different messaging. You test different codes, different offers and so on. Then, you see what works. If it’s a discount for a first time customer, if it’s free shipping, if it’s different value propositions you pitch, you find out what works and you AB test it, and then you keep layering it on.
You say, “Okay. That works for this. Let’s move on to the next thing, and see how we can convert them faster or more efficiently and so on.” Email was the first where we did a lot of testing very cheaply. Now, we have a way more robust email campaign, with a lot AB tests on every email we send, and a lot of segmentation. It took a while to build to that point.
Felix: Does it boil down to just you getting great ideas from successful people, testing it out, setting up a test to see if it works for your particular market, for your business? If it works, keep it, and then just cycling through this over and over again? Is that a key to success for you?
Rich: That’s the exercise. You keep it, and then you move onto the next thing. You have the funnel from end to end, when somebody discovers the brand and how you’re going to get them to check out at the end. There’s so many pieces in between, like what’s on your product details page? What’s your return policy? What’s your FAQ? How are you capturing emails? How often are you emailing them? What are you- How are you retargeting them on different networks or wherever they are? You have to fill the gap in between from end to end, so you’ve got it completely covered. Then, you close the loop and you’ve got an airtight machine at that point, where you control the entire customer’s experience, and it’s repeatable. Every person that discovers our brand, we’re pretty confident that they have the same experience from end to end with us, even when they’re interacting with our customer service team.
Felix: Yeah. I can imagine some listeners out there might be saying, “Yeah, you know, might be- This sounds like all great and everything, but it might be real easy for Rich, because he has a successful business now, lots of traffic. It’s easy for him to test because there’s a lot of people to test with.” If someone out there is just starting out and doesn’t have the traffic yet, what do you think are some important tests to try to conduct very early on in your business, when you don’t much revenue, you don’t have many sales, you don’t have many customers?
Rich: Yeah. Paying for sponsored content is something that took us a while to do. You can test on very, very small, either albeit on Instagram or the smaller bloggers. You can go to the biggest influencer in the world and you’re paying $20, $30, $50, $100,000 for it. You can also go to more niche publications or bloggers where you can try the same strategy, except for a couple 100 bucks, or even have them try your product. It took us a long time to pay. We don’t just gift product. Say, “Hey, these are our sheets. These are awesome. Sleep on them. Let us know what you think.” People were very, very receptive. That was free. When we see how that works, we’re like, “Wow. This person has 5,000 people come to their blog. What happens if the person has 50,000 people or 500,000 people?”
Yeah, those initiatives get expensive, but it gets more predictable, in terms of ROI in those initiatives. When you are spending the money, it’s not as much of a gamble. If I told you, “We’re going to pay $10,000 to this blogger to plug the product,” I can pretty much tell you what that’ll return for us, based on their engagement levels and who their readers are. Level one, we did it with way more niche and smaller people and people through Instagram or Facebook. We would just gift them free products that would cost us nothing but the product. If you’re confident in your product, that you have something great that you’re selling, then it should take care of itself. Then, you could test that on small scale, so you know what happens when you pay somebody huge.
Felix: I like that. Test something in a small scale that could eventually be scaled up and scale with your business, which sounds like exactly what you guys are able to do. At the beginning of this exercise, you were talking about getting ideas from successful people, test it out. If it works, keep it. If it doesn’t, move on from it. How do you network with these successful people? How have you been able to connect with people that are just a step ahead of you or that have been on the path that you are currently on?
Rich: Yeah. It takes some balls to reach out to people and just do it cold. I’m sorry for the language. Yeah, you just have to be humble and reach out. In the early days, when we were getting 10 sales a day, I would see every order ticket that came in and I could see who they are. I have a tool like Rapportive on my Gmail. What that plug in does, is it tells me, okay, it’ll read my Shopify order ticket and tell me, “Felix hosts the Shopify Masters podcast.” At that stage, if you were one of my first customers, I would have no shame in reaching out and being like, “Hey, Felix. Thanks for purchasing. I’d love to get on the phone with you for 10 minutes to just talk about what we’re doing and see if you have any advice. I see that you’re driving 100,000 people to your site. Would love to see what’s working for you.”
If you’re not in a competitive space, people are generally willing to share and exchange ideas, because you never know what someone’s going to grow into. At that point, we had 10 sales a day. Now, it’s a totally different story. We have tons of people doing the bet. I’m willing to give people the same time that others gave me. It’s just about being humble and reaching out to people for advice.
Felix: Were you reaching out to customers at first, that you had come across? Was that your first foot in the door with meeting successful people?
Rich: Yes. Absolutely. Generally, when you have- Generally, our first customers- I would say for a lot niche products, or a lot of Shopify stores in general, people are going to discover products, and they’re early adopters of something new. They take great pride in being, they’re like, “Oh, I discovered this brand. I’m the first of my friends.” They have pride in that.
If you’re humble and you go to them and you ask for their feedback or for any tips they may have, be like, “Hey, how was your shopping experience with us? I’d love to get your take.” Somebody’s like, “You know, the checkout process was a little bit confusing.” You can take that and adapt that information really quickly. Like I said, if you have 10 customers, in the early days, per day and 1 or 2 of them says this. That’s a significant percentage. Then, it really dictates what’s going wrong with the people that aren’t checking out, for instance. It’s about being humble and outreach just to get in touch with people and get the information.
Felix: Makes sense. I think for people that are maybe scared or shy to reach out to people that they don’t know, it’s usually because they think that, “Why would this person want to talk to me? What do they get out of it?” Did you have those hesitations at first? If you did, how did you get over them?
Rich: Yeah. In the early days, you really don’t have much to lose and you have everything to gain at that point. There was times, not too long ago, where you think you’re close to the end and 1 or 2 more weeks like this, and we’re going to be out of business. You could only improve at that point. You just have to have courage to reach out and be humble and take people’s advice. If you’re stubborn and you think your way’s the best, then you’re going to get stuck. It’s going to be very hard to evolve with times and get better tools. I really, really am a firm believer in networking and just getting little tidbits from people. If you keep hearing the same thing over and over, then it’s got to be true for people that aren’t telling you this. It happens for us all the time. It’s important to reach out.
From time to time, one of our shipping methods will go down, for example. It’ll say, “Ground Shipping, it’s not showing a rate.” 1 person will write in and say, “Hey guys, your shipping is not displaying a rate.” There was 100 people before that that just didn’t even bother to write in. You have to get in front of that and be proactive and reach out to people so you could learn as fast as possible. It’s really, really about speed and learning fast. Unless you have unlimited money, then it’s not a problem.
Felix: No. Yeah, definitely. I want go back that, because I want to repeat this again, because I think it’s so- I love that the way you’re growing your business is so- There’s definitely a lot of challenges, but it boils down to something still very straightforward, which is that you listen to a lot of people, whether it be customers or other business people, other entrepreneurs. Get as many ideas as possible, as much feedback as possible from them. Final ways to test to see if their feedback is actually makes sense and has actually scalable feedback, in a sense that other people are going to or would give the same type of feedback. Then, see if it’s a successful or not. If it is, keep it going and then keep cycling it through this. I just want to repeat it again, because I think that if a lot of entrepreneurs out there are listening to just follow that motto, you will definitely make progress. Maybe not as successful as you guys have gotten, or maybe as successful, but it’s definitely going to help you move in the right direction.
Rich: Yeah. I think I’ll add one more thing on how I go about it. My entire mentality of how I built my team is I don’t love generalists, in general. I like to be the only generalist in the room on our team. I like having a team of specialists that I work with, that I could count on for expertise, to execute the things that I know nothing about. I have to be confident enough to say that I know nothing about them. When I have these conversations with people, and they’re like, “Rich, Google search has really changed the business and really gotten us a lot more traffic.” For example, something like that. Then, I’d say, “Okay. What’s the best solution I can have to do this? Am I going to hire somebody that is going to learn it on the fly on my dime?”
No, I’m going to go out there and I’m going to see who is doing this, what type of resume do they have at some of the biggest companies in the world, and how do I track down that archetypal person, albeit an agency or person? I want to master to come in and execute like a surgeon and fix that problem for me. Then, I’ll move on to the next one, once I’ve plugged that hole. One at a time, sequentially, that’s how I built my entire team. Everybody’s a specialist in one discipline.
Felix: I love that. When you are a generalist, or anyone out there that is running a business, there are going to be holes in your skillset. There are going to be holes in your business. You need to fill those gaps with specialists. I think the concern is that when you are just a generalist or when you don’t have a skill in a particular area, how do you vet a specialist in that area? How do you know that they’re actually knowledgeable when you are not knowledgeable yourself?
Rich: You interview many of them and have many conversations. There’s no shortcut here. The most easy example of that is Google search for any commerce company. We had to interview 15 agencies and 10 different people that actually do that before- We kept hearing the same thing. We kept hearing everybody’s different strategy and their pitch. Until you filter it through and you’re like, “Okay. This guy understands what we’re doing,” or girl, or agency, or whoever it is. You say, “This person understands us. We really like the way they think about it. They think very similarly to us. We feel comfortable giving them our money and our budget to accomplish the same goals.” It equates to an orchestra. I consider myself, as CEO, to be the conductor of the orchestra. You don’t want a bunch of musicians out there. You want the cellist to play the cello. You want the pianist to play the piano. You want people that are masters, to get the best sound out of the orchestra. It’s my job to be the conductor. That’s the way I built the whole unit.
Felix: How are you able to identify what position you should hire for first? For anyone else out there that is listening, that has the budget or the revenue to make their first hire, how should they think through, “Well, who should I bring on? What roles should I bring on to my company first?”
Rich: I have a very easy answer for that. When it’s taking you or me too much time to do that task, then it’s time to pass it on to somebody else. I’ve done every role, with the exception of my co-founder and partner, Vicki, who does our PR and our social. All the communication stuff is hers. I’ve done most of the other stuff, to a point where I can’t do it anymore. If I was forecasting inventory, I was doing that, of course, when it was just the 2 of us, until the point where I couldn’t juggle the marketing and the inventory. I had to hire somebody to help me manage that.
While we were packing our own boxes in our apartment for the first 2,000 orders, until we were packing until 3 o’clock in the afternoon. Then, I had a few hours in the day to actually grow the business. I was like, “Okay. I need to free up the time and get a solution for [inaudible 00:35:17] orders.” I did the same thing for customer service. When it took too long to answer all the tickets, because there are just too many, I knew that was a signal I had to hire somebody, so I could concentrate on the growth stuff. We repeated that exercise over and over, pretty much with every task as we’ve grown.
Felix: Yeah. As a CEO, like you are, or if anyone else out there is a single founder, a single entrepreneur working by themselves, is there any role, or any skill set, or any function that you, as a CEO, should hold on to forever? Is it for a long time, even if it takes you a chunk of your day or a good amount of your time?
Rich: I think the last piece that I will relinquish eventually- I love my team. We have a great team. We work well together, and we’re all on the same page. The last piece I’ll relinquish is the financial aspect and the CFO duties that I have. The reason is because like I said, Vicki and I built this from just the 2 of us in our apartment. I’ve been so disciplined about what we test, what we spend and how we budget things. Until I have somebody that has that same respect for every dollar that we’ve built since we bootstrapped this whole thing, I’ll be very, very reluctant to give that piece up last. I don’t want people writing checks for the company that I won’t.
Felix: Makes a lot of sense. Let’s now talk about the very beginning of this. It sounded like you originally tried to get outside funding, some institutional investment for the business. Didn’t work out. Was that when you first turned to Kickstarter, when you guys realized, “There’s no one that’s going to fund us. Let’s just do this ourselves”?
Rich: Yeah. That was the first signal. We probably had a dozen meetings through NYU, where Vicki and I both went. We got connected with some VC’s. It just wasn’t sexy enough idea for a lot of them, and there wasn’t enough traction. We had to prove it ourself, without that funding to get it going. We had to go and prove that there was a market for it and there were people that wanted it. What we did was Kickstarter was the logical choice to reach that people and validate it. The amount of money you raise on Kickstarter is actually pretty tricky because we set the bar at $50,000, because we knew that if we sold $25,000 worth of product, or $10,000, “Yay”, we could pat ourselves on the back. That’s not really a huge business where we should pursue that for the rest of our careers. It would have been more of a hassle just to go through the fulfillment process, and who knows how big it would have been. $50,000 was like, “Okay. If we put that over a year, that’s almost $1,000,000. It could be something bigger.”
We ended up doing $250,000. Then, it proved the concept for itself. Then, you go back to the VC’s, at that point, or the investors in general, and then they say, “Okay. It’s too early. We need to see more. Can you do it not on Kickstarter? What is next? How do you scale this?” There’s always questions. I’m not shy about saying; I must have had 30 or 40 meetings with VCs’. Every single one told us no. It only motivated us more to prove that we were right and we can do this without them.
Felix: Again, you said $50,000 goal. Raised $237,000 from 1,733 backers. How did you do it? How were you able to- You started, you had this idea. You put the money into a- It sounds like you invested some money into the video and actually putting together the Kickstarter page. How did you actually promote it? How were you able to get the first backers?
Rich: It’s a good story. We have done so much for this business with the sharing economy and social networks, as cheaply as we could. We are forced to, and it was all for the best. For whoever is listening that is in the same boat or may not have that VC funding, it’s totally possible to do anything with the tools that are out there.
We rented a zip-car. Vicki’s background was in Public Relations, so she knew how to communicate with bloggers and editors and magazines and so on. She didn’t have these connections in the home space or the lifestyle space. She actually worked in beauty before. We packed up about 50 sets of prototypes. We packed them in a zip-car, a van that we rented. We drove around New York City, just dropping them off at the magazine buildings for Conde Nast or for Hearst or for Apartment Therapy. It was really, really important for us in our space. We just dropped them off with handwritten notes and said, “Hey, we’re a husband and wife team. We want to reinvent the bed sheet space. This is our product. This is how we made it. Let us know what you think.”
Yeah, we ate the cost of all those units, which ended up being several thousand dollars, and the cost of shoveling it around. We did it all ourselves. People appreciate the scrappiness and the resourcefulness. We actually got written about by about 22 out of the 50 or 60 we sent, which is an amazing conversion rate for that. They said, “Look at this start-up doing this. Husband and wife team trying to kill what’s a commoditized space and make people inspired to do something better there.” We did that. When we got the orders in from Kickstarter, we actually hired Task Rabbits to help us pack them up, the boxes, by the hour. For courier service, we used Ubers. We sent them with UberRUSH around. We did everything as cheap and efficiently as we could, until we had the capital that we generated ourselves to actually do things in a more robust manner.
Felix: I like that you guys had a story to tell as well, outside the product. It wasn’t just, “Here’s a great product.” You guys had a story of husband and wife team trying to take down this giant brick and mortar or physical retail business by going direct-to-consumer. I like that there was a story behind it as well, not just, again, pushing the product in front of these PR outlets.
Once you were able to successfully launch this campaign, how were you able to drive the buzz, or were you able to drive the buzz, from Kickstarter over to your Shopify site?
Rich: Super hard. That period in between Kickstarter and actually launching the business to be its own free standing business is very, very hard to maintain momentum. Kickstarter is getting a lot of buzz, in general, because the ideas are generally novel. Then, you put up the [inaudible 00:41:36] in XYZ publication or your Kickstarter. That just breeds more attraction, and so on. Once it’s over, it’s on you, the founders and the entrepreneurs, to keep that going. That was very, very hard. That’s when I hit the streets. I was having these conversations. I knew I couldn’t tell anybody at that point, but I couldn’t lose momentum.
We started to collect emails and over communicate it with the people that were our Kickstarter people, our backers, to treat them like family. We knew that was our ticket. Our early adopters were our ticket to more customers. If they all told 1 or 2 people, then it would just blossom and snowball from there. We over communicated. Emails that were not too frequent where we annoy them, but frequent enough where they’re in the loop. We said, “Hey, first round of production is done. We’re ahead of schedule. It’s on the boat, on the way here.” Or, “The cotton is done,” and so on.
People liked that. You make them feel like they’re very, very much involved. Those 1,700 people that backed us, we make them feel like they’re family and founders. We still communicate that in, especially emails that we send to them, as well. As we always say, “We consider you all founders of the company, because you helped us get started and get the ball rolling here.” It’s really, really about taking care of every customer at the first phase. It’s really, really critical to the business.
Felix: One thing that you guys had mentioned, [inaudible 00:42:55] you said that the pre-interview was about how email is an important channel for you guys. You mentioned that just now, too. Was the goal of email just to keep in touch with the original backers, original customers so that they would spread your product word of mouth? What was the strategy behind keeping in touch with them through email?
Rich: Prior to the store launching that October?
Felix: Yeah, I guess just in general. What is the overall goal when it comes to your email strategy?
Rich: It’s staying relevant and top of mind for people. Particularly with Kickstarter- I don’t want to dwell too much on the Kickstarter aspect of this in more of the story, but people tend to back things and forget about it. We wanted to make them feel very, very involved. We were taking this seriously, and we wanted to deliver the product that we promised them.
What we did was we over communicated, as I said. Then, that helped drive people to the site for updates. If they told people thereafter about it, we were collect- We had a little modal on the homepage that collected email. We said, “Give us your email, and you’ll get early access to when we’re back in stock and we launch to store.” We incentivized people with early access and people to refer other people. That’s how we got that email list of a few thousand people to start on day one. We converted so many people, because those people were so genuinely excited and interested in the product. It’s about just keeping that momentum. Email’s a great communication to do that.
Felix: I want to clarify this with your Kickstarter campaign, because I’ve heard the same thing from other entrepreneurs about how you want to stay, you want to over communicate with your backers. Most people will post in the updates of your Kickstarter. You’re talking about, not necessarily skipping over that, but you’re taking about going to email, as well, where you have an email list of the people that had backed it, and you’re sending emails to the inbox, and not just the updates on Kickstarter?
Rich: Correct. It’s personal emails from the founding team, or the founder, myself. When we were delayed in production, I fell on the sword. I think people appreciate that now that I said, “I’m sorry that I over promised on the delivery date. We had a production set back. This is their first time doing it. Please bear with us.” You tend to get responses from people like, “It’s okay. I appreciate the honesty and the persistence.” People just want to be included and be in the loop. As long as you’re doing that, then they’re okay with it.
It’s when you disappear and you’re nowhere, then people start to get angry. That’s when they don’t love the company, love the brand.
Felix: Makes sense. One thing I noticed when I was just browsing through your site earlier was that the email welcome ad pop-up thing with the incentive to give my email address is to get a free shipping, as your lead magnet. Was this something that you tested for a while? How did you know to choose free shipping? This is not the first time I’ve heard of people taking the same approach where they offer free shipping as an incentive for people to give their email address. Tell us about your experience with this lead magnet as a way to grow your email list.
Rich: Well, some of the early advice we received was, “Nobody wants to give you their email address for free. You have to offer them something in exchange to do this, if it’s information, if it’s early access, if it’s shipping, if it’s a discount, and so on.” I’m really, really- I cringe on discounts. I really don’t like that. It devalues the products even though we go on sale.
We test, and we still are testing. That’s actually an AB test there, if it’s first shipping. I’ve seen other brands that give you- I spoke to a founder of another brand that puts $7 in your cart towards your purchase. They say they tested $5, $10, $15, and $7 just gets people going the most. It’s just about testing numbers. We do the same. Sometimes, we have some offers, some sweepstakes, “Enter for you chance this week to win a comforter,” or, “To win a hardcore bundle.” People just need some motivation to actually give you the information. That’s a great, great opportunity to test right up front.
Felix: When you have this email list, what are you sending to your email list? How frequently are you emailing them?
Rich: We email pretty frequently. We do a campaign email once a week. We also have drip campaigns. The drip campaigns are critical because that’s the way of standardizing our customer experience. That allows you to test. We typically do a few emails in the first few days when the customers are in market. The thought behind that is if they got to your site, they got to it because there were some small or big degree of interest in either the company or the product. If you’re pitching it well, and if they’re genuinely interested, they’re going to buy either from you or a competitor, or some place else within the next few days. You want to communicate your value proposition as fast and efficiently as possible.
We’ve tested the [inaudible 00:47:59] if it’s Day 1, Day 3, Day 5, Day 4 or Day 7, or whatever it is. I don’t want to give too many details about where we are right now, but we test and we slide it around. We say, “Okay. What if we tell them about our great reviews on Day 2? What if we show them our new product releases on Day 2 instead of the reviews, and the reviews on Day 5?” You slide it around. You see what people engage with the best.
In the early days, it’s so noticeable because if you jump from 10 sales to 15 sales, you got a 15 percent increase right off the bat. It’s way easier to notice differences.
Felix: As you said reviews sometimes, you post out some social proofs, or- You’re not posting, you email social proof, or your email them new products. What are some other important messages or important types of emails to get across in a drip campaign?
Rich: In our drip campaign, currently, we have 1 product or sales email. It’s not the first one. We have a funny email that welcomes email to the list. We don’t like to take ourselves too seriously. We are a bed sheet brand. We don’t want to act like we’re so serious about it. It’s a fun product. It’s a fun space. People sleep in it. People are romantic in it, and so on. We play off that. We get people content of “What are 4 quick tips that you could spruce up your space if it’s not our stuff? One is buy sheets, but the other one is buy a plant for your bedroom, buy a candle, and so on.” Just little tips, little nuggets of information that people might appreciate, that we’re not trying to be so sales-y.
Not everything is like, “Buy our sheets. Buy our pillows. Buy this. Buy that.” It’s “We’re helping you. We’re your advocate.” At the end of the day, not everyone is going to buy from us. Most people are not going to. [inaudible 00:49:51] share, 90 plus percent. We want them to have a good experience with us and with the brand, so at least they think that we’re good people, and we’re honest people. We’re trying to help our advocate. When the time comes, they’ll come back around. That’s how we treat everybody. That’s what we try to communicate first and foremost, that we’re like, “We’re good people. Our interest is not to scam you.”
Felix: One other thing you’ve mentioned in the pre-interview was about how you guys liked to focus on not just how to get the customers, but then how to keep them. Talk to us a little bit about that. What do you mean by keeping customers? What are some effective ways for you to do that?
Rich: At NYU, one of my favorite marketing professors taught us this example. He called it “The Clock Model.” It was a circle divided up into 3 slices of a pie. It was the pre-purchase experience, the product experience as you purchase, and the post purchase experience. He explained that it’s very hard to master all 3, but you better make sure that you master at least one if you want to have a strong brand.
From day 1, I knew the product wasn’t going to be perfect because this is our first- Like I said, I’m a first time entrepreneur. I have no experience in textiles or sheet space. We’re self-taught with everything we did. I knew the product would be as good as we could get it, but not perfect. We didn’t have the budget to have this amazing campaign for pre-purchase for marketing and awareness. I knew the thing that I could do best was post-purchase, communicate with the customers, and take care of those customers, and try and get referrals out of them, try and get repeat purchases out of them. Then, I could grow it from that angle and reverse from the back end back to the front. Then, I’ll bring us more [inaudible 00:51:32].
We put an over emphasis on communication with our customers. Even with the returns process, we don’t automate that. It’s something that we take personally. We want to know the feedback as to why people are returning it. We don’t make it difficult for anyone. We just want to know some feedback. Then, we facilitate it with people, not with third party apps that could do that more easily. It’s about taking care of the people. If you communicate that like, “Hey, even if you want to return the product, tell us why. We value your feedback. We’ll do better next time.” People appreciate that. That’s how we envision it. You have customers for life that way.
Felix: Great customer service, return policy. Do you put them into another type of drip campaign, or anything, or communicate to them differently once they have made a purchase?
Rich: Every situation is customized at this point. I should say that it took a long, long time. We’ve moved from 3 ESP’s along the way to get where we are now with the exact features we want. New leads that come in from different sources have different email experiences. Customer’s first time purchase, second time purchase, third time purchase have different messaging and different- We do things differently with them and communicate differently. Everything is customized at this point.
It was built email by email, and step by step over the way until we’ve built this and this entire network. It’s a system.
Felix: Got you. Definitely see that theme throughout this conversation about how you have a methodical systematic approach and everything. I think that’s really key to making the kind of progress you guys have had. Again, you launched the business less than 2 years ago, quarter million dollars raised on Kickstarter. How successful has the business grown to today since the launch?
Rich: It’s huge. Kickstarter was April 2014. We came out of the gates and did in a [inaudible 00:53:32], after we launched, we probably did another quarter million or so of sales for that first million, about half a million. We quadrupled the second year to about 2 million last year. That was, again, on a shoestring budget of marketing. It was mostly referrals and organic. This year has been pretty explosive for us. We’ll easily surpass 8 figures soon.
I’m still methodical and building and building and building. We’ve never had a month that was smaller than the previous month since day 1, just because it’s been a slow, sustained, steady growth rather than anything that’s- There’s no silver bullet in this game.
Felix: That’s amazing. I think to close out on this, you guys obviously moved very quickly with the growth of the business, with setting up all of these systems, with sending up all the marketing. What do you think makes other business owners, people and entrepreneurs slow? What is it that, you think, slows them down the most that, maybe, you or your team have been able to breakthrough and be able to execute so quickly?
Rich: That’s an excellent question to end on. What makes people slow? I would say their resistance to learn and to be humble. I think it’s a theme that I keep repeating is be humble and just keep talking to people. If you think you’re too good for something, your brand or your company, or you know too much about something, then you probably don’t, and people are being faster than you, and you don’t even know about it. It’s really about talking and keep things constantly learning, I think that’s what it is, and surrounding yourself with the right people is really, really important.
I would say it’s borderline impossible to get to where we have without having a really, really strong team around you. I’ve been really, really careful about who I’ve hired. I take a long time to do that. I make sure they have a great skillset and a great personality. It’s really, really important, because we all feed off each other. We all work together in tandem.
The marketing has to move just as fast as the fulfillment and the operations aspect of it. If you’re not in sync with each other, the 2 wings of the business, then you’re doomed to fail because either the marketing is going to move too quick to the point where you can’t fulfill orders and you’re sold out, or you’re overstocked and you have no budget to actually spend on marketing. Everybody really needs to work together. We do a really great job at that.
Felix: Definitely, the big balancing act. What other goals do you have for the remainder of this year? What are some things that the listeners can look out for from you guys?
Rich: We have some new products coming out. We do everything reactively. We constantly take feedback from our customers. They tell us things that are great, things that are not so great, just so we have some new sheet materials coming out, some new product lines coming out. We’re going to do some more photo shoots to get some more inspiration to our customers and our community of how they can mix and match their products to make them better. It’s really, really just about growing the community that we’ve built and take care of them. They wanted gift items of their people and refer other people.
Felix: Awesome. Thanks so much, Rich. Brooklinen.com. It’s B-R-O-O-K-L-I-N-E-N dot com is the website. Anywhere else you recommend our listeners to checkout if they want to follow along with what you guys are up to?
Rich: Instagram is probably the best spot for us, for social media-wise or Facebook. I would love to have you come check out our stuff on our site, as well.
Felix: Awesome. We’ll link all that on the show notes. Again, thanks so much for your time. Rich.
Rich: Thanks, Felix.
Felix: Thanks for listening to Shopify Masters, the ecommerce marketing podcast for ambitious entrepreneurs. To start your story today, visit shopify.com/masters to claim your extended 30-day free trial.
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About the author
Felix Thea is the host of the Shopify Masters podcast, the ecommerce marketing podcast for ambitious entrepreneurs. Got something to share with Shopify Masters listeners? You can submit your story for consideration.