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18 May

Daehee Park – Tuft & Needle

In creating a product, we’re very iterative. It’s about versioning and constant improvements. In creating a company and a culture we’re very open and transparent. It’s about taking the lessons we’ve learned in the past and removing all the red tape that gets in the way of creatively pushing the boundaries and being super efficient.

Creator Profile:

Daehee Park + Tuft & Needle

Creator: Daehee Park (@daehee) – Co-Founder with J.T. Marino (@johnmarino)

Company:  Tuft & Needle (IG @TuftandNeedle Twitter: @TuftandNeedle FB: TuftandNeedle)

Location: Phoenix, Arizona

Websitewww.TuftandNeedle.com

Words of Wisdom – Everything we do starts with the end user, the customer. I think that’s one of our huge competitive advantages in our industry. Many manufacturers never deal with the customer because they are in business with the retailer. We grow with our customers, which allows us to make rapid improvements. We’re very flexible and nimble that way.”

 

It’s 3pm and I’m sitting at a café in Scottsdale, Arizona speaking to two commercial real estate executives tasked with supplying the city’s “who’s who” with the ultimate tech space.

Hustle & Deal Flow™ comes up in conversation and their immediate reaction is,

“Have you heard of Tuft & Needle?”

Intrigued by the name alone, I said, “No, I haven’t.”

They said, “You need to.”

They then proceed to tell me about this Phoenix-based mattress company run by two former Silicon Valley tech guys and the extreme growth they’ve experienced over the past two years.

Growth is a serious understatement!

When you take several thousand dollars and turn it into $1MM in your first year, $9MM in your second year, you are doing something VERY right.

Couple that with being the number one rated mattress on Amazon and an intense focus on the customers’ overall experience, and you’ve got an insanely disruptive force to be reckon with in a tireless industry with a lot of price gauging and over-rated puffery.

Tuft & Needle Founders: Daehee Park (Left) & JT Marino (Right)

 

There are countless words to describe the founders, Daehee Park and JT Marino, but if I had to make it all encompassing, I’d say:

Smart. Transparent. Disruptive.

Ironically, their journey to the mattress industry makes perfect sense. Here are two guys who created and designed customer-centric approaches in the digital and technology world and applied its general principles and theories to a physical product. Oh, and they’re doing it an industry that’s often problematic for the customer – Mattresses.

Why Mattresses?

Well, besides the painful experience co-founder JT Marino had when he and his wife went shopping for one, Daehee brought up a very interesting perspective,

 

“We got to a point of getting burnt out on building software for software’s sake in Silicon Valley. We’d be a part of companies that were building really cool apps, but they were ultimately solutions searching for a problem, rather than the other way around, and trying to force it with millions in seed capital. We wanted to venture outside of high tech, and see if we could apply the startup principles that we’d learned to an aging, traditional industry.

Why not? The best and most profitable companies are typically the ones who focus entirely on the customer experience while solving their pain points in the process.

Just hearing Daehee talk about helping their customers in seems to be a very obscure industry, makes me respect Tuft & Needle even more.

 

“Part of our mission is to educate our customers on this black box. We’re not about being a mattress that just sells online. We want to be branded as an honest company that opens up the transparency of this industry. . . And because we interact with our customers so much, they appreciate our willingness to be so open and transparent. They’ve truly helped us grow as a company.”

 

I sat down with Daehee on a couple of occasions and we talked about the obscurity of an industry that’s heavily driven by marketing and less by the customer, what it means to reinvest in a company and it’s culture, having genuine relationships with your customers and managing their overall growth. Here’s what else Daehee Park had to say:

Tuft & Needle - TuftandNeedle.com - HDFMagazine.com Interview

TuftandNeedle.com

 

HDF: Daehee, this is a cool company!! I’m glad I got to sit down with you, not once but twice (Laughter). Why don’t we start with a little bit more about where you’re originally from (Hometown and Current City)? What do you love about either?

Daehee: Thanks for taking the time to do this! So, I’m originally from N.E. Pennsylvania – Stroudsburg to be exact. I went to Penn State and that’s where I met JT. A professor in the entrepreneurship program introduced us.

After graduating, we had stints on the East Coast and in the Bay Area (California), but we ultimately decided to start Tuft & Needle in Phoenix, Arizona.

First, the cost of living here is amazing.

Second, there’s so much talent here. It’s not like San Francisco and other cities where you have to compete with giant tech companies to hire great talent.

Tuft & Needle - HDFMagazine.com Interview

Tuft & Needle at Arizona State University

 

Here, the talent needs to be employed or they leave. They’re looking for great opportunities with a cool company and we want to bring that to the community here.

Third, local colleges like ASU have been so helpful in assisting us with gaining some of that talent. I like that we can be a part of a city that has untapped resources just waiting to be utilized and in turn, it allows us to help grow the economy and market here. It’s a great way to help Phoenix, along with other companies, be put on the map.

 

HDF: I truly admire your take on Phoenix. I’ve known for awhile about the talent here, but because it’s such a vast, spread out city, it sometimes goes under the radar.

I know you come from a very gifted and diverse background in marketing, consulting and eCommerce. What were you doing before you co-founded Tuft & Needle, and why did you decide to leave that world?

Daehee: Well, while I was at Penn State I received my bachelor’s in cyber security and risk analysis and JT got his in computer science. Each of us worked for different companies after graduating.

I became a marketing strategy consultant for Acxiom and he was a software engineer for Hash Rocket, but we ultimately collaborated again for a social commerce startup in the Bay Area called Mulu.

In Palo Alto we realized we were building software for software sake, as well as the rest of Silicon Valley. It felt like everyone was trying to force ideas with a lot of money and we got to a point where all the startup hype wasn’t making sense.

We’d be a part of companies that were being sold or injected with funds left and right. Then you’d hear about other companies without clear business models gaining seed rounds in no time flat, etc.

Since all of this was really around tech given the location, we wanted to see if we could bring some of the same principles to a traditional vertical and solve a clear problem.

 

HDF: And Tuft & Needle was born?

 TuftandNeedle.com

Daehee: (Smile) Well, it took us a little brainstorming, but ultimately it led to us coming up with Tuft & Needle.

 

HDF: So from virtual products to a physical one!

Can you tell me about how you guys, both with tech backgrounds, chose the mattress industry and decided you were going to completely disrupt it?

Daehee: Probably not what you would have imagined, right?

Well, JT was newly married and he was shopping for a mattress with his wife. They really disliked the process, similar to visiting a used car dealership. The salesmen were pushy and difficult, all the product “features” were confusing or seemed made up and there were too many choices.

Because it was difficult to navigate through everything, the only thing to do was to fall back on perceived value based on price. He ended up buying a memory foam mattress from a big brand for about $3,500 with his wedding money.

After receiving the mattress, he thought it was mediocre – especially for the price. Then he wanted to return it but the manufacturer made him jump through so many hoops that he ended up giving up and keeping it. The process was/is so tedious, not to mention they make you pay for shipping it back.

Every night he was reminded of his bad decision to pay $3,500 for a mediocre mattress that he was venting about it to me. As he was doing so, we started putting together a list of all the different problems with shopping for a mattress and we called it a “Hate List”. (Laughter)

 

HDF: And I’m assuming the list revealed many problems?

Daehee: Well actually, we tore his mattress apart. We needed to figure out how we would go about making a mattress.

We figured out the components and started making phone calls to suppliers. What we discovered was that his $3500 mattress cost only a few hundred dollars to make.

“Our jaws dropped and that’s when we realized that the biggest problem was the enormous markup on price.

 

HDF: Wow! So one rabbit hole led to another and so forth. I bet you discovered a lot about the industry.

Daehee: Yeah, most of what you see with the mattress industry is marketing and sales driven. You’ll hear a lot about what goes into it, what it’s infused with (such as green tea or lavender), all the different layers, etc.

As an example, the more layers the worse the breathability is for the mattress. Salesmen try to sell you “layers” as a feature.

On top of that, there are essentially 3 tiers to this industry. The manufacturer, the distributor and the retailer. Most people only deal with the retailer and by that point, you’re paying for a bunch of middlemen and inefficiencies in the distribution chain when you walk into a store.

So, with that being said, we created a hypothesis:

“What if we create a high quality mattress made here in the USA, and sell it for a fair price and strip away all the gimmicks.

Then we went to proof of concept to validate over the next several months.

JT Marion & Daehee Park of Tuft & Needle - HDFMagazine.com

Founders JT Marino & Daehee Park on a Tuft & Needle Mattress

HDF: Daehee, the product looks and feels amazing. How have customers taken to it?

Daehee: Actually, we had to start completely from scratch. We really started out as outsiders to this industry.

And because a lot of companies repurpose “bad mattresses” with the same off the shelf materials, we didn’t want to hire someone from the industry.

For us, it was about starting fresh without the preconception of “just another mattress” already out there. It’s all about the perception of the customer, not the company or brand.

With that being said, we also wanted to create a business model driven by constant customer feedback based off of one product. Our idea was simple,

“Make one product so we can devote our time, energy and resources to constantly making it better.”

 

HDF: That seems very unlikely in the mattress industry.

Daehee: It is. Typically when mattress brands come out with a new model, they focus on just pushing it to market and spinning a new story. They likely won’t make any changes based on customer feedback. If they do make changes, they’ll release it as a new model while leaving the old ones on the market.

 

HDF: So, I’m being sold between a mattress that’s already been deemed as having flaws and a “newly” improved version with lots of new gimmicks and a different name?

At the same time, I’m potentially paying more for something that should’ve been done the right way the first time.

Daehee: Yeah. We don’t believe in that. We want to constantly be able to improve on the product we’ve made so we listen to our customers and immediately apply it to our mattress. It’s a constant state of iterations to be the best possible product.

I think the fact that everything we do starts with the end user, the customer, gives us a huge competitive advantages. Many manufacturers never deal with the customer because they are in business with the retailer.

Instead, we grow with our customers. This allows us to make changes very quickly for future iterations. We’re very flexible and nimble that way.

And because we interact with our customers so much, they appreciate our willingness to be so open and transparent. They’ve truly helped us grow as a company.

Tuft & Needle – Amazon.com

HDF: Well, I see the customer reviews on Amazon have been really good.

Daehee: Seeing all the great reviews on Amazon is awesome! We’ve had so many people ask us how we’re able to do that. I tell them it’s just our customer experience with the brand, product and service.

 

HDF: The best always put the customers first. Have there been any obstacles along the way that you didn’t see coming beforehand? Any valuable lessons in there?

Daehee: We’re a startup so we have to deal with all the things that come with a startup. We hit $1MM in the first full year in 2013, and $1MM in just a month by December 2014. Those kinds of sales mean we’re growing fast, but we have to be careful in managing our growth.

From a “growth” perspective: We’re bootstrapped. That’s a big factor. We fund our own growth through our profits and we’re growing quickly. Compare this to a venture-backed startup that typically spends ahead before the gains.

Our approach forces us to be lean and be a product-focused company first, rather than be marketing focused first. Hence, we needed to have a high enough satisfaction rating so they would organically spread it to their networks and friends instead of being forced through marketing channels.

From a “brand” perspective: Part of our mission is to educate our customers on this “black box” (industry) I eluded to. We’re not about being a mattress company that just sells online. What’s missing in the mattress industry is transparency and honesty.

And because we’ve stripped away all the gimmicks, it’s kind of been an uphill battle of going against customer preconceptions.

 

HDF: For example?

Daehee: People have been conditioned by mattress industry marketing that price and product complexity equate quality.

We don’t run seasonal sales or promotions, and people naturally expect them. They don’t understand there’s no concept of a discount because we’ve already priced it fairly.

People traditionally expect 50% to 75% off because the retailers have padded so much for high margins on resale.

 

HDF: I saw that on your “Truth” page of your website

Daehee: Because people expect this 50% off even though we’re offering our product at a very fair price, we’re having to unravel and reverse the market’s conditioning by years of gimmicky advertising.

Second, they see a $750 price tag and think it’s cheap quality. This goes back to their conditioning.

They see a thicker mattress or more layers and equate it to being “better”.

TuftandNeedle.com - Mattress Layers

Both are not true. So, we have to unravel these industry myths. We’ve positioned ourselves to educate the market and help the customer.

 

HDF: Daehee, I give you a lot of credit. It’s not always easy to sell a great product when people are expecting a catch. They don’t realize there isn’t one.

Moving away from Corporate life to being an entrepreneur, what has been the best part about “creating” for you?

Daehee: For me it’s about creating a product and a culture by abandoning archaic methodologies and taking a more iterative approach to things.

From a product standpoint, I wanted to see if we could take what we did in the software world and apply it to solve a problem with a physical product.

From a company standpoint, we wanted to take all the lessons we learned working with companies in the past to create a culture and a set of processes in the best way we can. It’s about being really open to new ideas and experiments with organizational design—Zappos is a great example.

And because we’re never married to something, if we find something better to use, we’ll use it.

It’s about being very flexible and nimble, as well as making everyone’s work easier and much more efficient.

When you create transparently, you know what everyone’s working on. I’ve discovered this allows us to constantly make changes without all the corporate red tape.

Team Tuft & Needle (Courtesy of Facebook)

HDF: Your transparency is one of the things I like the most about your company. How do you best describe Tuft & Needle as a brand? If you could describe the essence of it, what would it be?

Daehee: We want to be the most loved mattress company. The reason being is that there hasn’t been one to date.

Most people don’t know the differences between most mattresses and mattress brands. We want them to have a great feeling about experiencing Tuft & Needle. I want them to think of us as being fair, dedicated to quality and having superior customer service.

Tuft & Needle Team - Mattress Donations 2015 - HDFMagazine.com Interview

Tuft & Needle Mattress Donations Spring 2015 (Courtesy of Facebook)

HDF: Well put. So, what’s the best advice you can give someone just starting out in Entrepreneurship and / or taking the leap from their corporate job to becoming an entrepreneur?

Daehee: I think there are 3 key points: 1.) Validating your idea, 2.) Going to market fast, and 3.) Listening to your customers.

It’s like this.

A quick overview: Set up a landing page with your hypothesis to supply a point of feedback with your potential customer. You want to see if they’ll either give you an email or their money. Give them the option to do something.

As long as there’s an action for them to take, you’ll be able to validate and listen to their wants/problems.

From there, you can start driving traffic to your initiative. Do what you can to find traction fast – maybe some paid search, community forums, etc.

Doing this will help you move the needle faster to make decisions on your next steps.

As for “going to market, a lot of people are scared. They are afraid to make the leap. In order to take things to the next level, you really have to go all in and be fully invested emotionally. We quit our day jobs to be fully committed and we were going to find a way to make this work.

 

HDF: That’s a lot of great info Daehee! I see the Internet, eCommerce and Social Media have been a big part of your success.

Daehee:

Social media has meant a lot to us! We didn’t place emphasis on some platforms as we did others, but eCommerce and digital as a whole have been huge.

Our relationships with our customers happen through digital mediums and on Amazon. It’s the reason we’re rated as high as we are on there.

In fact, the reason we placed ourselves on Amazon as a new brand is because we wanted to earn trust from our customers. The idea was simple, if we’re trying to be iterative and customer-centric, how do you get people to openly critique you?

You go to Amazon because it’s the king of reviews. Amazon reviews are trusted because they can’t be gamed, which means you can establish real credibility there. So if that’s where we need to be to build confidence, so be it.

And from an ongoing customer feedback loop, we use platforms such as Twitter and Facebook to help with rapid response for inquiries and problems.

Tuft & Needle Twitter

Tuft & Needle Twitter

Tuft & Needle Facebook

Tuft & Needle Facebook

HDF: I think that’s where a lot of companies get scared with social media platforms and the Internet. They think mistakes are a “bad” thing and we know they’re not. In fact, being transparent and open with the customers makes them like us more. I believe customer lifetime values go up with transparency.

Daehee, this was awesome! Is there anything else you’d like the readers to know?

Daehee: Yeah. We’re now at 30 employees in Downtown Phoenix since we first launched. We were also fortunate to have hit $1MM in 2013 (our first year), $9MM in 2014 and are projected to grow at the same rate this year. Stay tuned for more.

HDF: We will for sure!

Tuft & Needle Founders - JT Marino & Daehee Park

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Matt Gottesman

Matt Gottesman is a global digital strategist and technology advisor, creator and editor-in-chief of Hustle & Deal Flow™ - an online magazine dedicated to the world's entrepreneurs, creators and makers, a Social Media Influencer and a consultant on New Media and go-to-market strategies for investments in digital marketing, technology, websites, mobile applications, eCommerce, social media and content.

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