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I met a woman who had just gone through a cancer treatment and as a result of the cancer treatment, she ended up having an early hysterectomy and she said, this caused me to go into early menopause. She said, if I would have had your seats when I was going through this, I think my rehabilitation would have been better. So all of a sudden they’re like crying with this woman. He thinking like, God, if I could have just started this sooner, maybe I could’ve helped more people. So my like little psychology heart was like, oh, I just want to help people, and at that same moment her husband walked up and he was like, I don’t know what you’re selling, but I’m buying. How much money do you need to get this thing off the ground?
Jay Clouse: 00:00:35
The startup investment landscape is changing and world class companies are being built outside of Silicon Valley. We find them, talk with them and discuss the upside of investing in them.
Jay Clouse: 00:00:48
Welcome to upside.
Eric Hornung: 00:01:03
Hello. Hello, hello and welcome to the Upside podcast. The first podcast finding Upside outside of Silicon Valley. I’m Eric Hornung and I’m accompanied by my co-host, Mr. Hot Apartment himself, Jay Clouse. Jay, how’s it hanging?
Jay Clouse: 00:01:17
It’s going well. Hot apartment. Is this a delayed complaint from the last time you stayed in my apartment?
Eric Hornung: 00:01:23
No, this is. We talked last week and you told me that you have been sleeping very poorly. Mostly due to the fact that your apartment is very hot.
Jay Clouse: 00:01:32
That’s true! No, you’re right. You’re right and you’re absolutely correct. And recently I bit the bullet and I’ve been using the air conditioner more despite what will be a heightened electricity bill. And it’s not, It’s worth it not only from more relative coolness in my sleep but also in the white noise that drones out the bar next to my apartment.
Eric Hornung: 00:01:52
So you got new WiFi and you just decided I have to turn off the AC. Like that’s how the costs work. You’re like, well I have to sacrifice something?
Jay Clouse: 00:02:00
Hey man, entrepreneurs got to pinch pennies. You gotta you gotta save costs where you can’t. I think I know where you’re going with this nickname for this week’s guest though.
Eric Hornung: 00:02:08
Yeah. You liked that because we’re jumping back into what was previously referred to as our ecommerce blitz with this guest.
Jay Clouse: 00:02:16
The blitz blitz? Yes. ECOMMERCE and retail blitz version 2.0. Today we are talking with Alli Truttman. I hope I’m saying her last name correctly. She’s the president and CEO of wicked sheets. Wicked sheets provides moisture wicking and cooling sleep products for people suffering from night sweats and hot flashes and I see what you’re doing there. Yes. Actually I hadn’t even put this together in my own head. Probably something that I could use given that I run pretty hot.
Eric Hornung: 00:02:45
Speaking of hot, any hot takes and the research you did on wicked sheets.
Jay Clouse: 00:02:51
Absolutely wicked sheets founded in 2008. It seems to me a lot of their startup activity in their traction and getting into the market really started several years later, beginning in 2012 and then really seeming to pick up in 2015 and here we are 2018. It would on its surface, seem to be a much older company than we usually have on the pod, but I don’t believe it was a full time focus for alley for a while and so interested to hear what her journey has been. It’s obviously been over time, but it seems like right now wicked sheets is really starting to hit their stride a little bit.
Eric Hornung: 00:03:28
Yeah, I would agree with that. I think that when we had set scouter on, that was the oldest company we had had on upside to date. This is almost four years older than that, so one of the things about companies outside of Silicon Valley that we found is they’re structured differently, so a startup can still be a startup almost 10 years later because of just different. A lot of it has to do with access to capital as we’ve discussed before, but there’s just a different path for some businesses.
Jay Clouse: 00:03:58
Yeah, and I’m going to go out on a limb and guess that there was a significant period of time in terms of developing the product and getting it into a place where it could be sold. Through my research, first of all, wicked sheets is based in Louisville, Kentucky, or Third Company in Louisville. They’ve raised over a million dollars in funding thus far and looks to be raising again soon. They’ve been on QVC several times this year, but it seems that there their first year really in market was in 2013 when they sold their first 500 sets of bedsheets. And who do you think their audiences here? It seems to me that their audience are individuals who run hot and the way I do and seemed to sweat when they sleep. It also seems that there’s a significant portion of their audience that are postmenopausal women with hot flashes.
Eric Hornung: 00:04:52
Yeah. I got that same feeling because of the opening line is comfort sleep solutions for night sweats and hot flashes, which sounds to me like they have two markets, right? People who run hot and people who have hot flashes. I’m curious how big that market sizes
Jay Clouse: 00:05:08
Same. There was actually. This is kind of an aside in the research. I found one article from Louisville from Louisville area in 2016, I believe, talking about Wicked Sheets being part of the Academy Awards in the gift giving section of the Academy Awards if they were providing some of their products to celebrities. And this article is specifically called out some celebrities that they thought were postmenopausal and in this stage of life and it was such a interesting different aspect of a news article that I’ve ever read. Um, but you know, I, so recently I bought new bedsheets, bought them on Amazon and did that based on thread count, but I did look at the coolness factor and Wicked Sheets here from what I can find because they are a polyester or they don’t actually have a thread count, but it was estimated to be equivalent to a 600 to 700 thread count sheet and my bedsheets or 1800. So to me that sounds like a significant difference that I’m interested to hear what that experience is like.
Eric Hornung: 00:06:11
Speaking of differences, I’d like to hear a little bit more about the differences between the competitors in this space because there are a ton of people who make sheets and Wicked Sheets. Did you find anything on competitors?
Jay Clouse: 00:06:23
Only that you know they’re selling on Amazon. They’re selling on QVC. There are a ton of other brands of bedsheets to buy on Amazon. Some of them arguing that they are the softest. Some of them that are moisture, moisture wicking and keep you cool. So I’m actually really interested to have this discussion about the competitive landscape specifically because if you look at Amazon, Wicked Sheets is priced significantly higher than just about any other brand that I found and so I’m interested to hear what they think their major differentiation is and that can justify that cost difference, but there must be something because in 2015 they jumped up from the 500 sets they sold in 2013 to 2000 sets at $150 a piece. So in 2015 they’re looking at around $300,000 in revenue. Interested to hear you how that those picked up this year since the Academy Awards, since being on QVC three times,
Eric Hornung: 00:07:19
I’m sure that we’re going to hear a lot about explosive growth in this last year. QVC three times. I feel like there’s a lot of times to be on QVC. I haven’t even been on once.
Jay Clouse: 00:07:28
Not once. Same. Alright. You ready to jump in here and talked to Alli?
Eric Hornung: 00:07:31
Let’s do it.
Jay Clouse: 00:07:35
Alli, welcome to the show.
Alli Truttman: 00:07:37
Hey guys. Thanks for having me.
Eric Hornung: 00:07:39
Alli. We like to start with a history of the founder and getting a sense of kind of where you came from. So can you tell us about the history of Alli?
Alli Truttman: 00:07:47
Yeah, so I grew up in a very small town in southern Illinois, so I am truly a midwestern girl. My town was teeny tiny, had 11 kids in my grade school class, basically
Eric Hornung: 00:09:04
What was the impetus behind being a child psychologist? Like where is the driver?
Alli Truttman: 00:09:10
Yeah. So, um, I grew up, again, like that small town mentality. I started babysitting when I was 10 years old, right. So a lot of people don’t start babysitting until they’re 15, 16, but our neighborhood, you know, everybody lived in my, on my street that went to school with me, so I’d wake up, get my brother ready for school and he’s my older brother, so that’s pretty telling. Then I go next door and get the two little kids next door ready for school. We’d ride our bikes together, we’d go to class and I just, I just love being around kids. I just, I was always drawn to look at how they’re learning, look at them play and I’m still a big kid myself and so I knew I was interested in the field and with children, but then I had a psychology class when I was in high school. It helps that my psychology teacher in high school was really good looking guy that played soccer, so I fell in love with just the, the theories behind helping people and that you can change behavior and you can change things around you by using these tools called therapy or dream analysis. And I was just enamored by it, so I found myself in an internship in college where I was working with kids with autism and I kid you not, this is such a strange way to get fascinated by autism, but I went on my first visit with a child with autism and she spit in my face and I thought this is going to be the most challenging career of my life. I’m totally in. I’m like, what? What do you do on your first end? The job you get spit in the face and you have like, you can’t react to that. You just have to go with the flow. So I thought, well, this is a challenge. Let’s do it.
Eric Hornung: 00:10:42
There’s gotta be a metaphor for entrepreneurship in there somewhere.
Alli Truttman: 00:10:46
Oh my gosh. Absolutely. Absolutely. Well, I always talk about entrepreneurship is, or at least the startup grind is running up a down escalator and I think a day in the life of a therapist is like you running up full speed a down escalator.
Jay Clouse: 00:11:00
I love that. I’m going to appropriate that phrase myself. Thank you for that. I wanted to backtrack a little bit, so it sounds like you played soccer collegiately at the University of Louisville, is that correct?
Alli Truttman: 00:11:13
Actually, at a division two school at bellarmine university, although we did play the University of Louisville. I’m in a lot of our exposition games, but you know, I actually, I was torn. I was going to play division one at Depaul in Chicago and uh, we showed up for my interview and the coach said, love what you’re doing, you’ll be the first person off the bench and I am such a performer and a competitor that I was like, well, I don’t want to go to a school where I’m the first person off the bench. I want to be the first person on the field. And so I interviewed with bellarmine and my parents were really pleased because it said not only will you be an athlete but you also get an education while you’re here. So division two athletics was great. I played 77 out of 78 games. There was a little red card in there that I had to sit out one day and I got to be a student at the same time, get to do all of those traditional student thing, so it was really a good fit for me. And now I mentioned University of Louisville for graduate school though.
Eric Hornung: 00:12:08
What did you do to deserve the red card?
Alli Truttman: 00:12:10
Well, I’m so embarrassed to say this. Um, I was on a breakaway and the defender came up, cleats up, slid tackled me, and while she was down on the ground, I reached down and picked her up by her shirt and punched her in the face.
Jay Clouse: 00:12:27
Oh Wow. There’s got gotta be a metaphor in there too.
Alli Truttman: 00:12:43
I mean, it was not one of my finer moments. I looked at my coach and he had this look on his face and I didn’t even wait to get the red card. I literally just walked off the field, walk straight to the bus. I knew I was getting the card and I thought, this is it. This is my moment. I just really crossed over to the other side, but we were down. No, actually I think we were tied. zero, zero. You’re five minutes left. I was on a breakaway. I thought in my head I’m like, here we go. I’m going to score. It’s going to be the end game. This will be great. And she came in, she had kind of been messing with me the entire game and the rafters wasn’t calling it. My coach wasn’t taking me out and he just looked at me and he was like, <13:11 uclear> that was what they call me, <13:12 unclear> hit a goal. And so I thought I was going to get in my head, I’m like, oh, we’re gonna win. we’re gonna win . <13:18 unclear> own away from me and just went into my fist and I executed.
Eric Hornung: 00:13:23
That’s, that’s an amazing story. Like I wasn’t expecting punch in the face when I asked that question. I’ll just be honest there.
Alli Truttman: 00:13:31
I just look like a bully.
Eric Hornung: 00:13:33
No, you don’t. You mentioned earlier that you went to Grad School at Louisville. What was, what was that for? Was that still in the psychology field or did you transition?
Alli Truttman: 00:13:41
Yeah, that was still in the psychology field, so once I graduated from Bellarmine I knew I was going to be in what we call human services, so I wanted to work directly with people, but at that point you can decide do you want to go into counseling and be a therapist or someone comes into your office and lays on the couch and you work through problems. I knew I wanted to do behavioral and health assessments, um, with patients and so when I got to the University of Louisville, I get to work in a lab and actually like, you know, measure cortisol levels in spit. I got to do one on one where we were doing behavior modification with children and school systems and so I got to do the hands on type of behavioral assessments at Graduate School, which I just loved. I absolutely loved it. I can be interacted with people.
Jay Clouse: 00:14:23
Can you walk me through the timeline here? What year we’re talking about when you’re in Grad school?
Alli Truttman: 00:14:37
Yeah. So, um, I went to Bellarmine from ’02 – ’06. I went directly to graduate school and my program, I could have finished in a year in a half with my master’s, but I ended up doing a TA position, so I taught intro to psychology in this massive stadium classroom to 400 students. Most of them didn’t want to be there and that was miserable, but I, but I loved the lab portion of that so I actually stayed an extra year and worked on another project and got published. We were assessing cortisol levels in students around exam time, so I got to be in the lab and work with the psychology and the sciences and did some work there and then went straight back to Bellerman and got my certificate in personal training and medical fitness. So I was working with kids with autism and doing personal training at the same time. So that was 2009.
Jay Clouse: 00:15:17
Talk to me about balancing being a student athlete with being a student. Was that challenging for you at all?
Alli Truttman: 00:15:23
You know, I’m someone that would consider myself. I’m self diagnosed add, which I think a lot of entrepreneurs have this beautiful skillset is what I like to call it because it really does help and being a student athlete, I actually performed better in the classroom when I had a full load of soccer and I probably performed better on the field when I had a full load of other extracurriculars that I had to balance and I think that just really drives focus so I had to focus when I was on the field, get that job done and then I could switch gears and then you have to focus in the classroom because being a student athlete I had to maintain a three, five to be in good standing with my coach and then I had to maintain a <16:03 unclear> with my parents in order for them to keep paying for my college tuition. So I didn’t have the luxury of being able to get a job outside of school and Sports. So I worked on campus for beer money. I even was really honest with my parents. I’m like, I’m pretty much just doing this bonus on job to get beer money, but it also taught me that I had to be balanced and focused when I was doing that as well. So I loved the challenge and I think that speaks just going back to my self diagnosis of ADD. I loved having a few things going on at the same time.
Jay Clouse: 00:16:31
And so if I’m looking at the timeline, you’re correctly. So you got, you went back to Bellarmine and got your certificate in 2009. Our research showed the beginning of wicked sheets at 2008. Yes. So can you help me tie in the timeline of starting wicked sheets with this time that you were at Bellarmine?
Alli Truttman: 00:16:49
Absolutely. So I go through my four years of collegiate soccer and I don’t get injured, well, significantly injured one time, right? Then I graduate and I go start playing indoor soccer with the boys and these, you know, the girls and boys we were playing with at the time or all ages. So you have some washed up people that show up ready to relive the glory days and you have some folks like me that are like, I just want to stay fit. And of course it goes back to we drank beer after the game. It was great. So I was playing indoor post graduation and in 2007, late 2007 that summer I went into a game and had a breakaway. Everything ends in a breakaway for me had to break away and the goal league came out and sweat my legs and I tore my ACL. Um, so that was the end of 2007 and I did about three to four weeks of rehab before I had made total reconstruction on my knee. So I had torn my ACL, I had messed up my miniscus, they had to go in and clean up some scar tissue. And so 2008 I am finding myself not playing soccer, completely bedridden, learning to walk again because I opted for the surgery where they took my own tissue versus cadaver. So my rehabilitation took quite some time. In that time I was really, really depressed basically because I wasn’t exercising like normal and I was bedridden, not being able to walk, not being able to cycle all that stuff, and I had always noticed that when I was playing sports, I had night sweats, but I could make sense of the night sweats when you’re exercising three times a day or you know, are running around like a chicken with your head cut off. And when I was bedridden I couldn’t figure out why I was sweating so much. And so once I got back to it, I started thinking about why the heck do I have these night sweats? So like most women do, we’re more clinically diagnosed with things. I went to my doctor and she’s like, well Alli, you know, you don’t have menopause, you’re not on medication, you don’t have cancer. All these things that would typically make someone sweat. You just don’t have them. So this was kind of the buzz time period when hyperhidrosis was being diagnosed and this is folks that have excessive sweating for no medical reason. Some folks get it in their palms, some people have it on their feet, some people get in their growing. I felt terrible for those people, but mine just so happened to come in the form of night sweats. So my body would shut down at night and in bed. I would sweat profusely whether it was me alleviating my stress or that was just my metabolism on overdrive. Mine just came in the form of night sweats. So I was doing this whole child psychology thing, traveled back to St Louis for Easter Brunch in 2008 and told my parents this thing that I had hyperhidrosis and my whole family around the Easter brunch tables like, oh my God, I sweat a ton too. So you kind of start putting the dots together and saying, well, this is genetic. This sucks. And my cousin was pregnant at the time and she said, well, I hate to tell you sister it doesn’t get better when you get pregnant. And so I’m joking around with her and I’m like, oh my God, my life is going to suck from here on out if I have this thing called hyperhidrosis, I’m going to be disgusting my whole life. And at that moment her husband walked past us and he was wearing a nike dry fit golf shirt and I just jokingly suggested that he was gonna come home one day and we were going to be in his closet, cutting up his golf shirts, sewing them into bed sheets so that we could finally sleep cool and dry. So it started in 2008 and I traveled back from St Louis to Louisville. That whole drive back, I filled up a notebook on how I was going to abandon my career of child psychology and start a sweaty bedsheets company. And so I didn’t end up leaving child psychology for a couple of years, but pretty shortly thereafter I think about six to seven weeks later I had figured out a way to get the fabric and sewed into bed sheets. Now sleeping on my first set of Wicked Sheets six or seven weeks after that initial conversation.
Eric Hornung: 00:20:35
What was that experience like? How was the first run of this first version of Wicked Sheets for you?
Alli Truttman: 00:20:39
Well, I experienced a lot of challenges because, you know, I, I went to school for 10 years to be a child psychologist. I had one business class and so really understanding the economics was difficult for me, but the other big part of it was I didn’t know how to sew. So I literally was like, well, I’ve got this idea. I could definitely cut up shirts and so I’m bed sheets but someone else is going to have to sew it for me. So I found myself going on Craigslist to find sewers. I was meeting with people all over town who had started businesses to try and really help me understand the landscape of I’ve got this idea, what do I need to do with it now? And I was a little bit risk averse early on. Now I would say I’m pretty significant risk taker, but I met with attorneys first off just to make sure that I wasn’t doing something that was going to put me in jail or like infringing on someone’s idea. And so it was really challenging. But the blessing of living in Louisville and having this southern charm is there are tons of quilters, there are groups around town, so I just got on Craigslist and found a group of ladies that I interviewed who knew how to sew and they helped me walk through those first prototype iterations that we had. But I slept in my, on my sheets my first night and they really worked and I was like, Oh, I think I’m onto something.
Eric Hornung: 00:21:52
So you mentioned something, you mentioned that you, it took you a couple years to really decide to dive all in and get out of the child psychology field. We hear that a lot with people kind of like dabbling on almost like a side project until they feel like there’s enough momentum to switch over. So can you talk about those couple of years as you were hiring quilters to, sew your own bed sheets for you and then what was the kind of tipping point that got you to go into this more aggressively?
Alli Truttman: 00:22:20
Sure. So I think there are two really poignant things that happened. One
Eric Hornung: 00:26:02
And what year was that?
Alli Truttman: 00:26:04
That was 2011 that dawn came on and so for the first two years it was bootstraps, me on the floor and my one bedroom apartment driving all over Louisville getting sowers to do this. And then it took us about six months to find a US manufacturer. So that was really, really challenging. So 2011 we call ourselves or we say that the first year that we were an e-commerce business, that was when we started using Paypal and all that stuff online.
Eric Hornung: 00:26:31
So I think now would be a good time to introduce what is Wicked Sheets and what’s the problem it’s solving.
Alli Truttman: 00:26:36
Right! So Wicked Sheets, our comfort sleep solutions for folks suffering from night sweats and hot flashes. So what started out as a solution to help people that are sweaty like myself or folks that I thought were high performance athletes actually started addressing a much larger market. And that’s menopausal women. So folks that are having hot flashes as well. So some people sweat a lot, some people just overheat at night and don’t produce a lot of sweat. So Wicked Sheets , wick away six times more moisture than traditional bedding, and when we say traditional, we mean cotton typically. They drive four times faster. There are two to three degrees cooler to the touch right now all night long. So there’s that cooling piece for folks that don’t necessarily produce a ton of sweat. And um, the thing that I was really wanting to address is a lot of the folks that we, the customers that we sell to have compromised immune systems as a result of a condition. So cancer, they are going through chemo treatment, diabetes, they have sensitive immune systems. So I want to make sure that this was hypoallergenic as well. So we worked really, really hard on being. We were actually the world’s first performance knit certified by the Asthma Allergy Foundation. So it’s hypoallergenic and we can control the things that are going into our sheets that are going to help our sleeper sleep better.
Eric Hornung: 00:27:51
So help me understand like how is this such an amazing or competitive advantage? What is like the secret sauce here? What’s the fabric that you stumbled upon in six to seven weeks that just. That was like, oh, I’m onto something.
Alli Truttman: 00:28:03
Growing up in soccer clothes and exercise clothes, I knew that it needed to be some version of Under Armour o rNike dry fit or Adidas Climacool, and so the first thing, the first rolls of fabric that I was buying were actually from Portland, Oregon, and they were just discontinued colors of these large retailers. So they were discontinued orange from Under Armour. It was a discontinued checkered pattern from Nike. A lot of stuff that was going into either yoga clothes or golf shirts or I don’t think I had any shorts, but some tee shirts and things like that. So I knew the technology existed, but when we found out that there were a super talented fabric engineers in Japan, I went, I’m sorry, not Japan, Taiwan, I went straight to Alibaba. Figured out who is a competent source of fabric. And I actually found myself with a swimming suit manufacturers. So I wanted to find hydrophobic and hydrophilic fabrics that would not take that moisture and make it go down to the mattress. So what when you think about a running shirt, you’re running and the sweat isn’t like coming down, it’s pulling it away from your body beating out on the other side. It’s being absorbed into the fabric itself and so we had to do a ton of research on what’s the fiber component that does that. What’s the pore size that leads to the good breathability and leads to clean air coming in and out of your bed because a lot of people who sweatsay the oils on my body or produced in my bed stinks. So what can we use to neutralize the PH? What can we do to make sure that this is hypoallergenic and has no harmful chemicals that are gonna hurt a baby if the baby sleeps in bed with you? So we did, I’d say a good solid two, one to two years on perfecting this fabric. And now we are, we’re still perfecting the fabric. Now we’re working one on one with this group in Taiwan and they help us figure out, all right, Allie, what’s the new spec you want to add to the sheet? And then we go through trials iterations and R and D, so we’re actually going to release another fabric probably I’m in six months that we’ve been working on for the past eight months. So we’re just always working to perfect it. Just like Under Armour is always working to perfect the perfect tee shirt.
Eric Hornung: 00:30:15
I kind of want to get in the weeds here because I’ve thought about this a lot and I’ve just always been curious. How does moisture wicking work? Whether it’s a tee shirt or bedsheets, like how does that work?
Alli Truttman: 00:30:26
Yeah. So fibers and the way that these fibers are woven, woven or knitted. We use a knitted fabric, so basically the way that they are constructed in the bed, it’s such that where you’re sleeping or where you’re sweating on this thing, it will pull the moisture away from your body. So wick just means absorbed and it’ll travel out to the dry surface areas of the bed. So when you say the sweat or moisture is evaporating, it actually is evaporating as it travels through that fiber construction. So it is all about how these fibers are either knitted or woven. And then when you mess with pore size you can actually change how much oxygen can be exposed to the moisture and then it dries even faster. So there’s lots of different technology out there. We just seem to find one that really worked. We’ve tested it against cotton, be tested against our competitors. So we know that when this is going out to a sleeper or our customer that we have. It scientifically is proven to work. It’s just now a question of do you like the field? Do you like the fit on your bed, does the color match? So you have all these other traditional bedding things that you have to think about. But really I love getting in the weeds on the science and the technology because my science brain was so drawn to, well if you can make science do it, the data doesn’t lie. And so that’s what I love. I can stand behind a product that I know the data point say this is actually going to work. Now, if it doesn’t match your comforter, that’s just not something I can fix right now.
Eric Hornung: 00:31:57
Okay. Second nerdy science question. Then how do you test that and compare that to other types of bedsheets? Like what’s the testing process look like?
Alli Truttman: 00:32:05
Well, there’s A. There’s like the testing behemoth called Intertek testing and you everybody when we got on Qvc, we had to send it there and there are Intertek offices throughout the world and there’s a very standardized form that they have to check off. Right. Does the same strength test or measure correctly? How hard can you pull it before there’s a hole in it? How much moisture will it absorb? Is there formaldehyde in it? So there’s like a generic checklist that the massive testing facilities have to check off and then we work with a company in the United States called Text Test and you can send them any sort of. And they’ll do performance testing, so they’ll do flammability testing. They’ll say, here’s how much bleach you can pour on it before the wicking ability decreases. For us, we’re really interested in what goes onto your sheets so we have them test urine and feces and all the good stuff that your body produces. I’ll let your imagination go there and see how it responds to it. And so we use that and then we can also send those test results to our international partners and just make sure. I mean, we test the snot out of these things. I’m just make sure it is going to wick it away and does like the gross stuff that’s in sweat. So my favorite conversation to have is it loves electrolytes and it loves sea bum and it loves potassium chloride and it loves the stinky stuff that’s in your head oil. It’s just gross, but they make synthetic forms of all that stuff to put it to the test.
Eric Hornung: 00:33:34
Yeah. It sounds like you test the snot into this stuff
Alli Truttman: 00:33:38
Yeah, and our baby line, we actually were like, okay, and they’re going to drool. They’re gonna like have all the nasty buggers all over it. Let’s see if we can wick it away. Never did I think I was going to be that person.
Eric Hornung: 00:33:49
Jay that was such a bad joke.
Jay Clouse: 00:33:53
It’s fine. It’s fine.
Alli Truttman: 00:33:54
I walked you into that.
Eric Hornung: 00:34:00
So we left your story in 2011 and we’ve kind of talked about the two years of getting that fabric right. So between 2013, 2014 and now it’s 2018, that’s a lot of time has elapsed. What has been kind of the big pushes as it been marketing? Has it been, like what has been the focus in addition to iterating on your fabrics?
Alli Truttman: 00:34:23
Sure. Well the unwanted focus was manufacturing something that we did when we said we want to go large and go to either a mass retailer. We know we need to grow and in doing so it’s going to be a recurring wholesaler agreement. Right? So I looked at it from the perspective of I love the BDC sales and I want to focus really heavily on BDC ecommerce. I don’t want to go into retailers, I don’t want to go bricks and mortar. I want to focus on growing the business organically for the BDC crowd and then we also had these opportunities like, where do we want to move next and where’s our customer base. And so I actually flew out to Silicon Valley and did a pitch competition. I know this is the funny part for podcast right? Outside of Silicon Valley. I flew to Silicon Valley for a pitch competition called the American dream’s entrepreneurs series and I was terrified. I actually had just read the Elon Musk book, which is so fitting because he’s exploding right now too. And I was like, I’m going to go on my entrepreneurial journey and if, if I do this pitch and nail it, the company is going to go gang busters after this. If it goes poor and I totally the bed, then I’m going to say all right, it was a great couple of years, II’m not going to be able to get funding after this. We got to grow this year. Like that was a 2013, 2014. So I had just finished a launch that program basically for 10 week program for non-business majors and I felt really confident that I had finally figured out my financials. I had finally figured out our roadmap, business canvas, all that stuff. So it felt really competent. In that same timeframe I bought out my original investor, got two new guys on board, had gone to a menopause convention, really understood that the menopausal audience and these physicians who were so tired of prescribing drugs to people for various things and it was causing night sweats or hot flashes. We’d gotten them on board. I’m like, well, the next thing is you gotta you gotTa see if you can get on home shopping network QDC where that menopausal customer is. So I go out, do my Elon musk thing. I ended up drawing the short Straw. I was like the last pitcher on the last day. And I walked into, um, I think it was an xfinity store where they were doing it. There were cameras everywhere. And Mark Zuckerberg, sister Randi Zuckerberg was actually the woman that I was pitching to and the VP of the home shopping network. I felt so completely intimidated. Midwestern Girl From Louisville, Kentucky walking in and all these people that were before me were wearing Christian Louboutin shoes. They had tea that would make you lose 20 pounds in like four days. And I thought, no way, I’m going to make it no way. So I kind of had like a little alley moment. I’m like, positive self talk here. You’re going to leave it all on the table. And they said in the pitch, they’re like, it’s you have three minutes, don’t go next to the table. You’re not going to talk to them directly. You’re just going to pitch and then walk off the stage. Well I knew something was going right because I think we were like 21 minutes into the pitch and they were like, Alli, come here, let’s feel it. And I’m like shaking their hands at this point. I’m like, oh my God. I think they liked me. Like I really think they liked me and they liked the product. But I think what they liked was, it was a product that solved a modern problem. Like I always say it’s like the new age solution to the age old problem of sweating. They liked that it was addressing a problem that not just menopausal women had but their husbands had and they’re pregnant. And so I thought this, this is it, this is my shining moment. So we ended up winning that pitch competition, which was great and that was a. They were promising me a slot on the home shopping network and so you get, you get like an email from her team and then you get an email from the HSN team and nothing’s traditional. There’s really bad communication. Well, I kept thinking like having these head stretching moments, like what is going on? Come to find out home shopping network was in the process of being bought by QVC and the cure rate group. And so my airing my showing actually got totally put on the back burner and they were like, it’s not going to work with us. The day that I was supposed to go on is when they announced that QVC was buying them and so I spent all this time, $300,000 building inventory and I then had to go to my investors and say, well, all the money I just raised for the company that I was going to use on salaries I spent on inventory and now the opportunity is gone and I, I just think, oh my God, this is. I just basically burned the company
Eric Hornung: 00:38:49
And this was 2014?
Alli Truttman: 00:38:51
This was actually more recent. That was 2016. I think that was 2016, so I’m trying to take you through very quickly from 2013 up now. So I ended up getting in touch with a woman from Louisville who actually was on QVC and she said, well, why don’t you just talk to my reps and see if it’s a good fit for QVC? If you’ve already been through the song and dance for the home shopping network and now they’re owned by the same company. Let’s see what we can do for you. And so I started talking to them. They put me in touch with the buyer and shortly thereafter I was flying out to Philadelphia pitching the buyer’s. Shortly thereafter I had a purchase order in hand. We spent about 14 months prepping for all of this stuff. We moved our manufacturing from Cincinnati. I know for our wholesale orders and I was just on in June or our first airing on QVC and it was, it went really well. Now I’ve been on four times, so it’s good.
Jay Clouse: 00:39:48
Wow. Okay. Well there’s, there’s lots of kind of backtrack and cover their. But while we’re on this note, so you’ve been on QVC four times in the last year?
Alli Truttman: 00:39:56
Four times in the last month and a half.
Jay Clouse: 00:39:59
Wow. Okay. And so what, what does that look like when you go on Qvc? What does that like kind of tactically mean?
Alli Truttman: 00:40:06
So QVC is a live airing, and so they basically are putting me out in front of their viewership, which is I think on a good day, it’s 96 million homes. The thing that they agreed with with me was my target audience has always been the target shopper, a QVC profile. So it was a really easy sale to make to them to say, listen, I’ve already been marketing to this, the home buyer who buys the linens or the family and she’s looking for things that are going to improve her life and make her life and a lifestyle better. And if that means buying it for her self or buying it for her husband, they’re really looking for solutions and QVC does a great job of going through a very stringent process and making sure that whatever they put on their show is going to help that person. So going on live with them is daunting. But now we are looking for these recurring wholesale agreements to help us grow top line revenue which will make us look like a really strong company that has a. addressed some really good channel partners. And also focusing on BTC. Growing that revenue. Allowing us to go out and actually have some serious discussions with investors in the future. Because I’m sure we’re going to have to do a series B sometime in the next six to nine months. And really focus on putting more money into salaries. Putting more money into marketing and then everything over it goes right into inventory.
Jay Clouse: 00:41:31
How big is your team? Right now?
Alli Truttman: 00:41:33
I say we’re a team of 11, but not everybody’s in the office. We’re like the the traditional ecommerce startup. We’ve got four people in Cincinnati helping us. We’ve got six people in Louisville. Three of them are in the office and we’ve got our engineer in Asia that we work with constantly, so I say we’re about a team of 11, but everybody’s kind of doing their own thing
Jay Clouse: 00:41:55
In what channels do you sell through? Right now you have qvc. You probably have your own website. I think you’re on, or I know you’re on Amazon. What’s your channel strategy in that way?
Alli Truttman: 00:42:05
We actually are also on [inaudible] dot com. [inaudible] DOT com. Brookstone.com. A few other like smaller specialty retailers that, we’re doing a lot of tests and measurements with that. So understanding is someone that’s looking for a sleep product when to go to asleep website, are they going to go to a very traditional website like Amazon and look for us and we’re testing a lot of key words and that. The thing that’s funny and interesting with resellers is when we partnered with Brookstone a couple of years ago, I was like, yeah, let’s use the brookstone name for some customer validation. If they see us listed on Amazon, this is great. Well no offense to Brookstone, but they’ve declared bankruptcy four times in the last like five years and I can totally understand why. The other day I’m searching Wicked Sheets. Like I usually once a week say, let me look on Wicked aSheets nd what pops up, you know, if we have to send the cease and desist letters, was the new competition. Well there’s Wicked Sheets on Walmart.com and we didn’t put our listing up there. Come to find out Brookstone had listed as on Walmart.com. That is not our target customer, so I had to reach out to them and I’ve had 11 buyers since we started with them. I had to reach out their chain of command. No one knew about it. Everyone’s like, oh sorry, that shouldn’t have happened and then it takes a couple of days to take everything down. So we have to be really, really cautious with who we partner with and make sure that I’ve read all the fine print that we don’t end up on a website that isn’t necessarily for our target customer. You know, we’re vigilant on price points and, and what these customers looking for. So..
Jay Clouse: 00:43:36
I was going to touch on the price point front because I think I’ve heard in the past that when you go on QVC often they will have a price point they almost kind of put on you, which may be different from where you’re selling elsewhere online. Is that true? Is that something you’ve experienced? What’s that look like?
Alli Truttman: 00:43:52
That is exactly true. And it was something we knew and I had a discussion with the board and the investors I said is their first go at it. I’m not sure what to expect. Right. I know what I’m selling it to them for, but what they’re offering to their customer for, I have no control over that. So we just have to be basically we have to play defense and say we have to be okay with losing some sales that would traditionally be on our.com or on Amazon. We have to be okay with that because the larger plan is QVC is a massive retailer now that they’re owned by Qrate. They have partners with Zulily and Front Gate and Ballard Designs and home shopping network and if we really want to grow this organically BTC and organically within reseller channels, we have to play the game. And that’s just something we’ve seen with our competitors are our number one competitor is sheets and they very quickly went to Bed Bath and Beyond and you know, we’re watching the things that they’re experiencing and I think we all understand that we have to work together for market validation and that there is a large problem out there that people want to sleep better, but we just all have to carve out our own niche in that respect. For us, we knew that going with QVC was going to be risky and it might be challenging, but all we’re trying to do is shorten our learning curve so that we can get with another retailer or in a situation where we’ve learned from that and then we know what to expect for the next time.
Jay Clouse: 00:45:12
As you’re going through this kind of hyper growth phase right now, it sounds like what are, what are the KPI’s that you guys look at as a firm to say, okay, we’re doing this right, we’re doing this wrong. How can we do this better?
Alli Truttman: 00:45:23
Yeah, so interestingly enough, I just got back from Chicago. One of our investors, she’s brilliant. She lives in Chicago. I just flew out there yesterday. We did a day marketing retreat and you know, what we’ve been doing traditionally has been very focused on that specific one customer. And so, um, we call her Sally. Everybody has their own persona. Sally has been the main driving or driver of my marketing efforts and when we met on Friday, we want it to totally spice it up. So looking at, now we have all this data on her, you know, are we going to just pour kerosine on the persona of Sally and basically use our marketing dollars that we’re going to invest, you know, three times this year on are we going to put it on the same trajectory that we have or do we want to spice it up? Do we want to look at some other avenues that we’ve not been paying attention to? Because at the end of the day everyone sleeps. Everyone benefits from a cooler sleep, a dryer sleep and uninterrupted sleep. So what are some opportunities there? And that’s what I love about being an ecommerce business. We can build out these tests and put them to the test tomorrow and I think we’re gonna find out some really interesting stuff and I just don’t want to ever limit us from our customer base.
Jay Clouse: 00:46:35
on the product front. Something that I saw that you said, since you use this fabric that isn’t measured in thread count, usually a lot of bedding. It has some number of thread count. So you have some measure of something, I don’t even know what people really use that for other than I think I use it as a proxy for like how comfortable it is. Can you talk about what thread count means and what wicked sheets compares to?
Alli Truttman: 00:46:57
Yeah, absolutely. So thread count, uh, we like to say thread count is out, right? So we are a knitted fabric and knitted fabrics are actually one continuous loop of the same fiber. So it is knitted out of one fiber woven fabrics, which is where you come into thread count, um, discussion. They actually use 400 counts of thread or 600 counts of thread and typically traditionally the higher the number, the thinner the sheet is and that they think the software, the sheet is. Now with that, when you go with softness and you want to have a certain hand feel as what say. And in the fiber and fabric world, you actually can limit yourself on the technology. So we went with a knitted fabric so that we could be more scientific with what we’re trying to accomplish. So when you say, okay, what’s your thread count Wicked Sheets? Ours is a thread count of one, but it’s comparable to the feel of a 700 800 thread count because we use a silk weight fiber so we can even control the silkiness and the weights of our yarn when we make my construct Wicked Sheets. It’s really a fascinating process. That goes back to when people were weaving theme things on looms. You know in huts, this is, this art of sewing goes so far back and now we just use technology to innovate selling than you can produce really cool high tech fabrics.
Eric Hornung: 00:48:15
What else? A couple of finance focused questions, some numbers question. You guys cost to acquire someone. What’s that like in your different channels? BTC, and we’ll go QBC as your two majors.
Alli Truttman: 00:48:26
So cost to acquire customers. We work on this all the time. It’s different for every single channel, right? So I always take. Amazon is a great example because I pay a monthly fee to be on Amazon. I pay a per transaction fee to be on Amazon and if like QVC is going on, for instance right now we’re running a sale because we want to have some competitive pricing. So our cost to customer is daily, especially when we’ve got all these other resellers that are advertising us and we have to make sure that we are not losing sales and and going under basically trying to win a sale over. So for me it makes sense if you’re going to buy from QVC.com, I think you should buy from QVC.com. All my end game is to get you sleeping on Wicked Sheets. I want you sleeping on Wicked Sheets. So whether you bought it from wickedsheets.com, from QVC, from Amazon, I think what draws them to my website as the second purchase, which we know our customer will typically sleep on them in six to seven weeks later by their second set because they’re like, Ooh, now when I take them off the bed, I don’t want to wash them and have to put my old sheets back on. I want another set of Wicked Sheets. So I want basically them to buy their second set off of wicked sheets.com, which is obviously a much less cost of acquisition. So from that, getting them onto our website, you also have to think about facebook ads, Google Adwords, what is that top bubble that I’m paying to get eyeballs on me? And then then they go into my funnel and how much money am I losing it in every single stage of the funnel. So from a really high level, it’s expensive to get them onto my website. I don’t make as much money obviously when they’re buying from another reseller, but I know that that’s a vital important part of this step or process in buying because the second purchase is going to be from me where I make more money.
Jay Clouse: 00:50:22
How about the third purchase? How often are customers purchasing? A third set of sheets?
Alli Truttman: 00:50:27
So the third set is usually a gift, which I love. So the third it goes one to me. I love it. I don’t want to sleep on cotton anymore. I now need to have another set in my rotation. Sally’s friend Kathy just got diagnosed with cancer and now she’s going through chemo, so the third set is going to be for my friend. And then she loops her into that, into our, um, you know, buying procedure or my daughter’s pregnant and she’s complaining of night sweats. So we know that that third set is a gift and a conversation. So we want to make sure that we’re talking to them and staying top of mind with them when no other new life experience happens.
Eric Hornung: 00:51:04
And what percent of customers are repeating repeat buying.
Alli Truttman: 00:51:08
I think last year we were at 28 percent. I’m really proud. We have like a two point three percent return rate and typical home furnishings is 15 percent. So we are historically low return rate and high repeat customer rate.
Jay Clouse: 00:51:22
What does the awareness or education process look like for getting people to understand the differences between your fabric and cotton and why they should try?
Alli Truttman: 00:51:32
So I think the education piece actually has one of our competitive advantages and something we’ve tried really hard to differentiate or use as a differentiator of ourselves and our competitors. We’re really focused on the health aspects of it and so typically, a person finds us because they’re searching night sweats and some medication night sweats and some condition they’re suffering from or why am I hot when I’m sleeping at night? So I’ve been really, really focused on the healthcare aspects and talking to the customer about that. And then it’s not even a question of why are these sheets better? It’s, Oh, I didn’t know I needed sheets when I was taking Welbutirin for my depression. Oh, I didn’t know that, changing this aspect of my bedroom might help me sleep better at night when I’m suffering from posttraumatic stress disorder. So the education piece is not necessarily on why we’re better. It’s on, oh, I didn’t know that I needed this, um, in order to help me sleep better. Does that make sense?
Jay Clouse: 00:52:34
Totally makes sense. In our research, I found, I found an article, I think it was with the Louisville business career or something along those lines that was talking about your growth between the years of it goes 2013, 2015 I’m looking now. Yeah. So you had mentioned that in 2013 you had sold around 500 sets and in 2015 that was closer to 2000. What’s the last three years been like for you? Or especially now that you’ve been on QVC, are you seeing large growth from those figures?
Alli Truttman: 00:53:03
We are. The purchase order from QVC will obviously be a huge bump from us, but I think the really important thing with growth is the opportunities or someone that was sewing this out of North Carolina and Cincinnati at 25 units at a time. The larger purchase orders helps me manufacturer a better product because we have efficiency models now we’re doing the same thing over and over again. We decrease our error because we don’t have to change threads and sizes and things. So I look at the number of sets we’re producing like okay, so we’ll do like 10,000 this year or something like that. It’s better for me to actually manufacturer more sheets. It makes us a better product because our efficiencies now have increased and we’re not making as a human errors as you do when you’re handcrafting a product. So we don’t have to change the threads as often, so I love math manufacturer. You can actually build processes that work versus when you’re working with smaller batches, you can see you see a lot of increased errors.
Jay Clouse: 00:54:04
Can you talk about the the larger market size here? What is the end goal? What is the big opportunity for Wicked Sheets?
Alli Truttman: 00:54:12
We can look at that from it from two different perspectives. From the B to C perspective and the BDB perspective. BTC, I always like to use the example of in the United States there are 6,000 women entering menopause today. 80 five percent of them are going to have hot flashes. Most of these women are going to be waking up uncomfortable whether they’re sweating or not or just because they’re overheating at night. That is a huge opportunity for us. I think it’s estimated that in menopause population is about a $12B market. And within that I think it’s $2.6 billion, our bed sheets and pillowcases. So that’s just a huge opportunity on its own. When you talk about it from an E perspective and you’re looking at the QVC shopper, she probably is close to menopausal age, but she could also be buying for her husband, she can be buying for her sister, she could be buying for her daughter and I think you can see that opportunity and say that we call this person to
Jay Clouse: 00:55:32
I did want to ask actually if during your pitch in in San Francisco, if you’re wearing the wicked sheets, helping sweaty people spoons since 2008 shirt.
Alli Truttman: 00:55:42
I showed up. Oh my gosh, I absolutely should have worn this shirt. We made these for our 10 year anniversary party this year and people love them. They were like, oh my God. I thought, oh, they’re funny, no one’s going to wear it, it’s just something that team could wear. And I had people calling you going, can you make that for me? I’m totally wearing it. So that was great, but actually it is widely known in all of my pitches. I can’t wear sleeves because I, I will sweat through, I will pit out in front of people and a lot of people laugh and they’re like, well that’s so good. You’re like totally selling it even more because you’re legitimately sweating while you’re talking about sweating. And I’m like, yeah, but then people start looking at your armpits and kind of forget about what you’re talking about. So, so my pitches are very prescribed, if you will.
Jay Clouse: 00:56:26
One of the last questions that I have here is talking about your decision to remain in Louisville and what Louisville has done for your business. Has Geography played a part in the viability or success of Wicked Sheets?
Alli Truttman: 00:56:39
I think it is 100 percent a key component of why Wicked Sheets still working, right? So, and I don’t necessarily have to say something equals success, but I’d say while we’re, while we are still growing and the access that we’ve had has everything to do with this region that we’re in. And some of it even goes back to the traditional ideals of we’re producing a product that people have to sew that is handcrafted and this area with this southern draw draw or charm. They have a lot of fields for sewing and producing things by hand. It’s not to say that they’re terrified by technology because I think this region actually is doing a great job of finding good tech, developing good tech, selling tech, but I think when you combine technology with fabric technology and alar lost art of sewing and you produce a tangible product that is a problem solution type of product, I think people will get behind it. And in Louisville it just, I just have better access faster. In Louisville no one will turn you down for coffee. If I wanted to talk to the guys that sold Genscape for $148,000,000, I could literally have coffee with them tomorrow and they’d be like, how can I help? And then like flying to Chicago, this woman has done tremendous business. She’s by all means, I’m sure she’s going to be a billionaire list one day, opened up her home and said let’s meet and have coffee at my house and do a marketing session. You have access to people like that who really want to help and it’s not like, oh, I’m only gonna do this because I now want 15 percent profits interest in your business. So I think that is a really poignant statement to ecommerce in the Midwest, in Louisville and the surrounding cities.
Eric Hornung: 00:58:26
Alli, is there anything that we didn’t ask that we should have?
Alli Truttman: 00:58:30
Hm. No, I think you guys are good. I love. I love talking to. You got To do science. We got QBC. We got to be the customer. We talked about the background. I think it’s great.
Jay Clouse: 00:58:38
I have one dangling question in the back of my mind. You started this by buying fabric from these clothing manufacturers that use them as performance fabric for exercise, let’s say, and now you’ve kind of diverged and gone down the path of what people need when they sleep. Is there a future opportunity where this is kind of brought back to where it started and its performance fabric that can be used as clothing or is that not practical?
Alli Truttman: 00:59:03
Oh, I didn’t dream that it becomes a wicked where type of situation, but as I mentioned, we watch our competitors very closely and our one competitor is dabbling in an athlete’s line of sleepwear and Tom Brady is actually doing a recovery tee shirt for sleepwear. So I. I think that there’s a lot to be said for that, but since I have night sweats, I will say the last thing that I want on top of me when I’m sleeping are more layers. So you’re going to get to hear the Alli likes to sleep clothed as close to in the buff as possible. I don’t want more layers of anything on me. And then you know, so you have clothes on, you have your underwear on or whatever. Then you have a sheet and you have a comforter, then you have a throw blanket or whatever. I am all for the sleeping as little clothing as possible and let the sheet wick away the moisture for you. And so I’d actually rather focus on building out a better pillow, a better mattress protector. And we have a mattress right now that I think is far none in terms of breathability because a lot of the folks that we were that we’re buying wicked sheets. I just spent $7,000 on a memory foam mattress and it’s making me sweat profusely helping my back. But now I’m a sweaty beast at night. What can I do? And so we offer just by one fitted sheet, you know, we got like the millennial special, you can buy a fitted sheet cases and that’s all. So I think I’d rather focus on sleep than sleepwear in terms of decreasing layers, increasing the breathability.
Jay Clouse: 01:00:39
Great. After the show, if people want to learn more about you or Wicked sheets, where should they go?
Alli Truttman: 01:00:44
You can contact me anytime at wickedsheets.com. We have a contact button on there or follow us on Facebook at Wicked Sheets on Twitter and Instagram as well, and I always say people can email me anytime and I always share my personal email address. It’s Alli, firstname.lastname@example.org. So I’m always hope to help anybody, especially if you’re in soft goods manufacturing.
Jay Clouse: 01:01:05
Awesome. Well thanks for being on the show, Alli.
Alli Truttman: 01:01:07
Thanks guys. It was a blast.
Jay Clouse: 01:01:13
We just spoke with Alli Truttman of Wicked Sheets. What are we about to do here in our third segment?
Eric Hornung: 01:01:19
Well, this third segment, which is what we call the verbal hypothetical deal memo is Jay and i’s favorite segment on the podcast in it. We’re going to talk through kind of what we learned in our research, what we learned from the founder, and just kind of our general feelings about the founder, the company, and the opportunity. And Jay there’s gonna be four questions that we look at. What are those four questions?
Jay Clouse: 01:01:42
Yeah. Generally here we’re trying to answer implicitly or explicitly the four questions. One, how committed is this founder, two what are the founders chances of success in this business and in life? Three, what does winning look like in terms of revenue and my return as an investor and four why has this founder chosen this business? So Eric, along those lines, where do you wanna start here? You wanna start talking about Alli as a founder?
Eric Hornung: 01:02:08
I think we should start. I mean we like starting with the founder, but when we look at one of those four questions and we don’t have to go through them line by line, but I think the easiest one to just kind of check off is why this founder pick this business, do you agree?
Jay Clouse: 01:02:23
Very clear. Yeah. Which is a huge plus in my book, right? To have a founder who’s scratching her own itch or wicking her own sweat was, not bad right? I think is generally a positive sign for Alli as a founder and I’m going to get my hot take. I had a great time talking with Alli and there are a lot of things that stuck out to me as a good dedicated and hard driving founder. I think it’s something that we find with former athletes a lot, a certain level of discipline and dedication and she was embarrassed to tell the story of her red card when she punched the player in the face that that took her down in a weird way. I was. I was kind of into that. I was like, I think that’s a positive in the long term that there’s this level of passion evident in what she’s doing. Maybe there’s an argument to be made that there should be some restraint as well or some risk mitigation, but I think that’s generally a positive sign for Alli as founder. What’d you think?
Eric Hornung: 01:03:25
Yeah, I completely agree with that. I think that, and kind of stepping back again, you talked about athletes as a whole. They have this kind of drive. I think it’s just intensity like there. That’s kind of the same feeling I get is when they go into something, there’s a lot of intensity behind it. Whether it’s punching someone in the face or it’s tackling a business enterprise. What were some things that maybe gave you pause?
Jay Clouse: 01:03:50
Going right into it. So to me it wasn’t a question so much of this concerns me with their, their numbers or their model dynamics. What we didn’t get was a super clear response to the question of customer acquisition costs and I think that was some intentional availing by Alli, which you know, that’s, that’s her decision to make. But because I didn’t have that clarity on their customer acquisition cost, it’s hard for me to run some numbers and understand, you know, to what level of scale does this need to get for me to get my return as an investor. Anything that stuck out to you?
Eric Hornung: 01:04:26
Yeah. I kind of want to elaborate on that point a little bit and not just look at Alli, but this is maybe a takeaway that I’ve had in doing over 20 of these podcasts so far. This idea that some of the best deal memos we have where we have the most information and we’re very excited about the company and the opportunity and we understand and we can quantify it in our head, come from founders who give crisp answers with a lot of numbers and then give the story. I think that founders that give a lot of storytelling and use a lot of adjectives really get you excited about the future of the company, but I don’t walk away with the same level of understanding when I’m going through the deal memo and preparing my thoughts for what I think about the company though I might leave the conversation more energized.
Jay Clouse: 01:05:17
Sure. It’s, it’s, it’s a level of show, but don’t tell. I got the vibe that it was less of a trying to, you know, some, some founders we’ve talked to, it’s clear they’re trying to paint around a question. They’re almost politicizing their answer right? And that wasn’t the feeling I got from most of our interview with Alli, more so I just got a level of excitement that took her to the story. But at the end of the day, there were, there were some questions that we had that we didn’t get answers to, which makes this part of the deal memo difficult when you’re trying to look at quantifiable numbers and put a number to say, is this something that makes sense as a returnable company?
Eric Hornung: 01:05:53
Speaking of returns and numbers, we did get a couple of numbers throughout the interview. Here’s the ones I have in front of me. If there’s any I’m missing, please chime in. So I have 28 percent of customers repeat 2 percent return rate and over 10,000 sets coming up this year. Those are the three numbers that stuck out to me as telling a story. Were there any other numbers that popped out to you?
Jay Clouse: 01:06:20
I had those same numbers and I think that 10,000 is useful to put in context of. That was a 500 unit total in 2013 2000 unit total in 2015. We don’t have a lot of data from 2016 up until now, but the projection, she kind of left out there was 10,000 sets this year. Still pretty great growth. The 28 percent repeat by I think is a good figure and I’m assuming that was from their first purchase and not necessarily the second purchase. You talk about some people will buy a third set and that’s usually as a gift. I was excited and this goes back to our original leg of the ecommerce and retail blitz with Lupe returns. I was excited to hear that return rate that’s very low, which is awesome and helps to knock things out. The number that really stuck out to me, she the two numbers that stuck out to me that you didn’t address we’re in the United States. 6,000 women are entering menopause daily, 80 five percent of them will have hot flashes and that’s estimated to be a $12billion market with $2.6billion of that being attributed to bed sheets and pillowcases.
Eric Hornung: 01:07:28
Yeah. That gets to the market sizing side of things and it does feel like a huge market. You hear the, read the stories and the journal or hear on podcasts about the aging US population. I’m not super familiar with hot flashes. I don’t know that they happen for a couple of years and then they go away or they stay for years. Once you hit menopause, I’m not completely sure on that, but assuming it’s the ladder, there is going to be a longer and longer period where people are having. Women are having a need for this type of product
Jay Clouse: 01:08:06
And that’s one segment of the market, right? You still have people who have hyperhidrosis or some other medical condition, whether it’s a combination with their medication. It’s larger than just this one figure that we have, which I think is a positive sign because that one figure alone is pretty compelling. Something I didn’t want to touch on that came up in really listening to this interview. Alli said they’d probably be raising a series b here soon, so it is worth noting that besides having technically been founded in 2008, even though she says 2011 was the first year they consider themselves an ecommerce company. It does seem like this is a more mature company than we’ve then we typically have on the podcast. Something that stuck out to me as a positive sign that was a quick, concise answer that told a good story was, her level of detail in thinking through her, her channels and funnels. When it comes to acquisition,
Eric Hornung: 01:09:01
What about that was exciting or interesting to you?
Jay Clouse: 01:09:05
It just doesn’t come up with many of the founders that we talked to that they are deep. It’s almost like an optimization and a level of awareness that you get to over time that what could sheets is clearly ad because they are. They’re selling through multiple channels. They have their own website, they have Amazon, they have QVC, you see Brookstone, they’re aware of all these channels. They’re established and they’re looking at, okay, since we have all these sales happening, how do we lower our acquisition costs or where do we spend our add money to drive up these channels? It’s just a level of maturity that I think you get to that derisks this as an investment.
Eric Hornung: 01:09:39
Yeah, that definitely makes sense. I thought that there definitely were multiple questions where the idea of channels came up and I. I definitely agree with you there. One thing that I wanted to mention that I was probably most excited about was the intense drive to make the product better. This idea, they had a commitment to the product. They had a commitment to testing. You made a bad dad joke about snot something.
Jay Clouse: 01:10:05
It was a good dad joke, but a dad joke nonetheless.
Eric Hornung: 01:10:08
A great dad joke about. I really think that it seems like the product comes first and I think when people do a great job of making the best product possible, whether that’s creating a new line, which it sounds like they’re doing a new line of fabrics or it’s iterating on the same line that you’ve been working on. I think that that is the primary driver for success when you’re creating a differentiated product.
Jay Clouse: 01:10:36
Yeah. What do you think about moving forward? I’m just going to jump because I think we’ve covered a lot of ground here pretty quickly. Kind of want to jump to future casting. What are you looking for out of wicked sheets moving forward? What? Is there anything else that concerns you? Is there any type of signals that you’re looking for? What’s, what’s the future of wicked sheets in your mind that we should be looking for?
Eric Hornung: 01:10:58
In one word, it would just be focus because they had, I think the raising their series B to scale and I might be projecting there, but if they’re raising their series B to scale, there’s going to be a lot of cash that comes into the door and that idea of wicked wearables or wicked, uh, what was the name they had for a kid’s clothes, wicked sleepers, those kinds of things might be a distraction. I’m not sure how much of attraction or what they would be, but I think they have such a big market that they could tackle here that if they can really focus and dominate the couple markets that they have, the hyperhidrosis, the menopause markets, the cancer I think was one that had come up. I think focusing and getting market penetration in those areas will allow them eventually to expand into those new things that they want. But yeah, focus would be the one word I would look at. What about you?
Jay Clouse: 01:11:57
Yeah. I’m looking to see how their channel strategy evolves and their entire marketing acquisition strategy. The crazy thing about QVC, and this is something that I brought up in the interview because I hear it from one of my clients in
Eric Hornung: 01:14:02
Yeah, I completely agree and I think that plays into my idea of focus. You just elaborated and made it sound a lot better, so thank you for that.
Jay Clouse: 01:14:09
Welcome back to the to the United States, my friend.
Eric Hornung: 01:14:13
So I think overall, very impressed with the founder, impressed with the market size. I think that there are some lingering questions that we have specifically around numbers that we just didn’t get to in a couple of areas of potential shadows, but it was a really fun podcast and I am excited. We’ve had a company on that is a little bit older, but not too much older that we can compare past guests too. Little interesting tidbit here. Next week we’re going to go the opposite way. Next week we’re going to talk to someone who is much younger than any of the other podcast guests we had, so it should be an interesting justification.
Jay Clouse: 01:14:52
Yeah, it’s exciting. Through this podcast, I feel like I’ve learned a lot about ecommerce and retail, which I’m really into and it is nice because you can you can model this stuff out pretty well when you have the data to play with it. I do think ecommerce and retail businesses are attractive if they have the numbers that work out. Yeah, I love I love hearing about the INS and outs of marketing and how they actually bring the product to market, develop the product. That stuff’s exciting to me, so this was fun. All right guys, that’s it for this week. If you guys have any thoughts on our interview with Alli, any of her responses, the company, we’d love to hear from you. Tweet at us at upside fm or comment on breaker. If you think that you would be a good guest roadshow or you know a good guest for our show, feel free to email us as well. email@example.com and we’ll talk to you next week.
Jay Clouse: 01:15:41
That’s all for this week. Thanks for listening. We’d love to hear your thoughts on today’s guest, so shoot us an email at firstname.lastname@example.org, or find us on twitter at Upside FM. Will be back here next week at the same time talking to another founder and our quest to find upside outside of Silicon Valley. If you or someone you know would make a good guest for our show, please email us or find us on twitter and let us know. And if you love our show, please leave us a review on itunes. That goes a long way in helping us spread the word and continue to help bring high quality guests to the show. Eric and I decided there were a couple of things we wanted to share with you at the end of the podcast, and so here we go.
Jay Clouse: 01:16:17
Eric Hornung and Jay Clouse are the founding partners of the upside podcast. At the time of this recording, we do not own equity or other financial interest in the companies which appear on this show. All opinions expressed by podcasts. Participants are solely their own opinions and do not reflect the opinions of Duff and Phelps LLC and its affiliates on your collective llc and its affiliates or any entity which employ us. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. We have not considered your specific financial situation nor provided any investment advice on the show. Thanks for listening and we’ll talk to you next week.
Wicked Sheets provides moisture-wicking and cooling sleep products for people suffering from night sweats and hot flashes. Founded in 2008, Wicked Sheets has appeared on QVC and is based in Louisville, KY.
Learn more about Wicked Sheets: https://wickedsheets.com/