Pod Insights How I Built This with Guy Raz Brooklinen: Vicki and Rich Fulop About this episode On the first day of their Vegas vacation in 2012, Rich and Vicki Fulop sat down on their hotel bed and immediately had the same thought: "These sheets are really nice!" The fabric was the perfect blend of cool, crisp, and soft, but the sheets turned out to be way too expensive to buy. So, Vicki and Rich wondered if it was possible to make high-end linen at reasonable prices; linen that would appeal to a younger market, "not just our moms." After many stumbles, they built Brooklinen into a $100 million brand, and are hopeful they can withstand today's economic turbulence.
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Transcript 12,963 words · 4 speakers
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0:00 Guy Raz? Hey, really quick before we start the show, you've probably been hearing me talk about our new live video series we're doing on Facebook. And you can see old ones if you go to facebook.com/HowIBuiltThis. Anyway, all this week, we are focused entirely on food. And every day, starting Monday, April 20 through Friday, April 24, I'll be hosting a live video chat with a different chef or restaurant owner each day to talk about how they're dealing with the current economic and health crisis. And our guests this week are amazing. We'll have Jose Andres, Christina Tozzi of Milk Bar, Alice Waters, Sami Nusrat, and Michelin three-star chefs Daniel Hoom and Kyle Conant. And they'll all talk about how they're using the power of food to help solve big problems,
0:45 Guy Raz? including the ones we're facing right now. So join me live every single day this week, from April 20 to the 24th, at noon Eastern time on facebook.com/HowIBuiltThis.
1:02 Speaker 01 This is amateur hour here. We had no barcodes on the boxes.
1:06 Guy Raz? So you didn't even know what was in there?
1:08 Speaker 01 No, we would just tear open boxes and hope, check to see it was the right size, and be climbing all over. This whole room was filled essentially to the ceiling, packed to the gills with boxes and pallets. And we're literally climbing on top of these mountains of boxes, tearing them open and hoping that it's the right size and color in there. It was just a comedy of errors.
1:34 Guy Raz? From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.
1:45 Guy Raz? I'm Guy Raz, and on today's show, how what happened in Vegas did not stay in Vegas when Rich and Vicky Fulop got inspired to sell high-end sheets and brew that idea into Brooklyn in a $100 million brand.
2:03 Guy Raz? So a not insignificant number of stories we've told on this show started around the time of the Great Recession of 2008. And that's because lots of people couldn't find jobs, so they had to create their own. And while the situation now is somewhat different, I have no doubt that in five years from now, we'll be featuring a lot of stories about ideas that were hatched in the middle of the pandemic. Because think about it, when have you ever spent so much time in your home? For most of us, never. Normally, we get up, we do our morning routine, we leave for work, we spend the day out, we come home, evening routine, and sleep. And so these days, you might be coming up with ideas for things around your
2:46 Guy Raz? house that could make your life better. And some of those things might turn into the next great business story. Now, it didn't take a pandemic for Rich and Vicky Fulop to try and figure out how to make their bed more comfortable. It actually took a trip to Las Vegas. They stayed at a hotel with amazing bedlinens, but turns out, they couldn't afford to buy them. And even if they could have afforded them, they realized they had no idea why they were so expensive. And we can all probably relate to that, right? Because if you're like me, you go to Target, or TJ Maxx, or Marshalls and browse the bedlinen aisle for the best thread count at the best price. But does a super high thread count really matter?
3:30 Guy Raz? Actually, not really. And what's better? Satin, percale, flannel, twill? Who knows? So after spending some time researching the industry, Rich and Vicky decided to launch their own brand of direct-to-consumer sheets, as good as you'd find in a high-end hotel, but at a fraction of the price. Basically, as Rich will explain, Warby Parker, but for bedlinens. And that brand they launched in 2014, Brooklinen, initially couldn't get a single investor interested. But last year, Rich and Vicky sold over $100 million worth of bedlinens. And they've expanded way beyond sheets and pillowcases to furniture and art, and lots more.
4:15 Guy Raz? But of course, like everyone else, like all of you listening, they're trying to figure out what the next few months could mean for their business. When we sat down to talk, I was in my home studio in Oakland, California, and Rich and Vicky set up some microphones we sent out to them at their apartment in Manhattan.
4:34 Speaker 01 I am in our bedroom, and I have this mic and boom hooked up to our night table. And Vicky is in our living room with the mic and boom hooked up.
4:44 Speaker 02 Yeah.
4:45 Guy Raz? And are you up high, like, when you look out the windows? What do you, what do you see on the streets in New York?
4:52 Speaker 01 We are 14 floors high, but to be honest, you don't see much these days. It's kind of like a, like a ghost town.
4:58 Speaker 02 Yeah, it's dead silent.
5:00 Guy Raz? Wow.
5:01 Speaker 01 But on a typical work day, it can be pretty loud down here. There's just a lot of activity, but not in this
5:08 Guy Raz? Not in this moment.
5:08 Speaker 01 Climate situation, moment? I don't know what the, what the correct word is.
5:12 Guy Raz? Yeah.
5:13 Speaker 02 That's our dog.
5:17 Speaker 02 Well.
5:18 Guy Raz? Sorry.
5:18 Speaker 02 He's done.
5:18 Guy Raz? It's okay.
5:19 Speaker 02 He's done.
5:20 Guy Raz? By the way, what's your, what's the dog's name?
5:22 Speaker 02 Dukes.
5:23 Speaker 01 Dog's name is Dukes.
5:24 Guy Raz? Dukes.
5:25 Speaker 02 He was named after a character.
5:28 Guy Raz? By the way, miraculously, Dukes only barked that one time during our entire interview. Anyway, Rich grew up in northern New Jersey. His dad ran a deli and convenience store, and his mom ran a photo development shop. And Vicky was born in the former Soviet Union in Belarus. Her parents were both doctors who eventually settled down in Rhode Island. And both Vicky and Rich wound up going to college at the same time to the same school, NYU. But they didn't actually meet there.
6:00 Speaker 01 We actually never met at school, believe it or not.
6:03 Guy Raz? Oh, wow.
6:04 Speaker 01 So same class, same year, actually had many common friends. And we were kind of interconnected and very much in and around each other. But we'd never met until
6:14 Speaker 02 That's right.
6:15 Speaker 01 about six months after we graduated, we found ourselves living in the same apartment building in Manhattan. And we met there through a mutual friend that was actually visiting Vicky.
6:24 Speaker 02 So a friend of ours said to me, my friend Rich lives in the building, his power is out. You know, can he come have dinner with us? And we said yes. And then that was how we met.
6:35 Speaker 01 I remember it specifically, my roommate at the time forgot, he was responsible for the power bill. Didn't pay it. I ordered some Chinese food delivery while after work and there I was eating my Chinese food in the dark. It's got a sad story and a mutual friend said, hey, I'm in your building. Do you want to come join? And clearly I was, I was up for it. Needless to say.
6:58 Guy Raz? And, and this is, I guess, what around 2007?
7:02 Speaker 01 This is January 2008.
7:03 Guy Raz? 2008. All right. And, and did you start dating right away? I mean, did you, did either of you call each other or text each other something and say, hey, you want to? Or was it this kind of a slow burn?
7:15 Speaker 02 I think we started dating right away.
7:17 Speaker 01 Yeah. After that meeting in her apartment, coincidentally, we shared the elevator the next morning in our building. It was a rather big building. So it was like an almost immediate reunion. And I kind of took my, my 20 seconds in the elevator to make my move with her.
7:32 Guy Raz? Yeah.
7:33 Speaker 01 And I would say it was the fastest dating experience you could possibly do because, you know, it was like, beat you in the lobby at eight o'clock. It was kind of the, the planning process and things moved quickly from there.
7:46 Guy Raz? And at the time when you started dating, what, what were the two of you doing?
7:49 Speaker 01 I was working for an online over the counter currency and commodities broker called Gate Capital.
7:57 Guy Raz? And Vicky, what, what were you doing?
7:59 Speaker 02 I believe I was a paralegal and I was studying for my LSAT. Or maybe I had just taken it and I was already applying to schools.
8:07 Guy Raz? Got it. So your, your goal was to get a law degree, right? Okay.
8:12 Guy Raz? The two of you, I guess, a couple of years later, not a guess, you did get married in 2010. And when you got married, I guess you were about to get your law degree, Vicky and Rich, you were.
8:29 Guy Raz? You were sort of doing a bunch of different jobs, a lot of jobs around, I guess, marketing-related stuff?
8:36 Speaker 01 Sort of. At that moment, I actually just chose to restart my career and I was a sports fanatic and my dream was to be Jerry Maguire, growing up, so.
8:44 Guy Raz? To be an agent?
8:46 Speaker 01 Yes. So, I actually got an opportunity through a mutual friend after I got laid off to work at Creative Artists Agency, CAA, in their sports division.
8:55 Guy Raz? Yep.
8:55 Speaker 01 And I was touring around the country with Manchester United and FC Barcelona.
9:00 Guy Raz? Doing, wow.
9:01 Speaker 01 Yeah, so it was a joint venture between CAA and Major League Soccer.
9:04 Guy Raz? Okay, great, okay, got you.
9:06 Speaker 01 So, I was where, I had my dream job, the only problem was I wasn't making any money. It was an internship and I was, what, 25, 26 at the time, so I was making, you know, a few bucks an hour, but I really took that opportunity to reset my career and really follow my passion.
9:22 Guy Raz? And, and Vicky, when you graduated from law school, did you go and work for a law firm or apply for, for jobs at firms?
9:33 Speaker 02 I didn't. So, I would say probably by my second year, I felt deeply that I really didn't want to practice law. I knew in my bones, I really didn't want to practice and it wasn't right for me and I wasn't going to work as hard at that as maybe I would doing something else. I really wanted a creative outlet, so I started interning during my third year, kind of, and I, I landed an internship at Tory Burch in Public Relations while I was in school. That kind of was what opened the door to me to work in Public Relations, which is what I ended up doing after law school.
10:05 Guy Raz? You went on to get a job in, at a PR agency, right?
10:09 Speaker 02 PR agency, that's correct.
10:10 Guy Raz? Got it. Rich, I guess at, at a certain point, you, I mean, you're, you're doing work, you're involved with Major League Soccer and kind of pursuing this thing that you're really passionate about and you decide to apply to business school. Why? Why, why did you decide to do that?
10:27 Speaker 01 I mean, I came from a family of entrepreneurs, you know, albeit small businesses. So I very much had the itch to do that. I always was kind of in business. I remember in middle school and high school, I was buying and selling concert tickets and sporting event tickets. These were in early days of like eBay and whatnot. I was always trying to, trying to make a little money, always had a job, but I was just trying to find my path really. And it just, I thought I would take my GMAT and kind of see where I could land after that and if it would be a worthwhile path to pursue.
11:03 Guy Raz? It's interesting because I grew up, my parents had a jewelry store, they're a small business entrepreneurs, and I saw them struggle, even though they eventually did okay, and worked so hard. And that actually, I had the opposite reaction. I didn't want to do that because of all the, the struggle and the uncertainty that went along with it. But in your mind, you always thought, I think I want to do something.
11:28 Speaker 01 Always, always. My parents never had a boss. They were their own boss always. So that's the structure that I always was familiar with growing up. And I really liked that freedom of controlling their own destiny. And that really inspired me and I learned a lot. My father would leave at four in the morning every day to go to the deli because he had to wait for the newspaper deliveries so they wouldn't get stolen. It was Newark, New Jersey was where his deli was. And he would close at 6:00 PM, be home by 6:30, 7 o'clock. And to be honest, he'd be in bed by, by eight, eight thirty. So, so it wasn't a lot of time to spend with him every day, but he worked hard. And I mean, we weren't the richest people, but I was a very, very happy kid. And, you know, my, my parents definitely made it happen.
12:13 Guy Raz? Yep. And, and Vicky, your parents were doctors. Did you, was there anything in your mind about entrepreneurship, about doing something like your own thing? Or were you not quite really thinking about that at that point?
12:29 Speaker 02 I think I've always had maybe a far off dream of making something out of nothing. I can't say that it even was fully fledged as I'm going to be an entrepreneur. I had always wanted to design things and kind of make things that might make people happy to make something out of nothing. But I didn't really think that it would become a reality, to be honest.
12:48 Speaker 01 Yeah, she, to add to, to what we both just said, I hadn't found what my business is, but I'd always been kicking around. So I had some really, you know, in hindsight, stupid ideas that she, she probably wisely talked me out of. I had a, a puppy portraits business that I was trying to pursue. And I was also, I was really passionate about these European style hot dogs that you eat vertically in like a baguette. That I experienced when I traveled and I wanted to really start like the next, you know, McDonald's based on those, those vertical hot dogs. Also did not go very far with that, but you know, I was always kicking around ideas.
13:27 Guy Raz? Yep. So you go off to business school at NYU. So you're still in New York, Rich. And Vicky, you're working at the PR agency.
13:34 Speaker 02 Right.
13:35 Guy Raz? But I guess before you started business school, the two of you took a trip to Las Vegas for what? For fun or for work?
13:46 Speaker 01 No, no, just, just for fun. It was, it was about two weeks before, it was August 2012. So it was a couple of weeks.
13:54 Guy Raz? Las Vegas in August?
13:56 Speaker 01 Yeah, well, I, I had this, yeah, we had a small window and wanted to do something fun. Yeah, probably not the wisest choice. It's like 110 degrees.
14:02 Guy Raz? It's like going, it's like, it's like going to Winnipeg in February.
14:06 Speaker 01 We've probably got some package deal that was pretty cheap at the time.
14:09 Guy Raz? All right. So you're in Las Vegas in August.
14:12 Speaker 01 Yep.
14:13 Guy Raz? Probably just walking through air conditioned tunnels from one casino to the next.
14:17 Speaker 01 Yes.
14:18 Guy Raz? And you stay, where did you stay?
14:20 Speaker 01 We stayed at the Wynn.
14:21 Guy Raz? And from, from what I understand, this is the kind of beginning of what would become your business. Tell me what happens.
14:30 Speaker 01 Yeah, so we we check in, we're tired, we just traveled. We put our stuff down in the room and we both kind of just sat on the bed. And we both had this weird moment where we were both had our hands on the bed and we're like, ooh, these sheets are really nice. It was a very strange thing to like have a meeting of the minds about, but we both kind of did at the same exact time.
14:52 Speaker 02 Yeah, they were really cool and crisp and soft, which seems contradictory, but it wasn't. Kind of like when you get nice sheets for the first time and you slip into bed and you're like, ooh, like this is a good, this is nice.
15:05 Guy Raz? Yeah.
15:06 Speaker 02 That was, it was just kind of that feeling.
15:08 Speaker 01 Yep, and we were not textile people. We didn't know, you know, anything about this. We knew if something felt good or it didn't feel good at the, at the time. And this, this definitely stood out to us.
15:19 Guy Raz? And just curious, did you have a conversation pretty soon after and say, we should maybe get these sheets for our apartment? Like, we should find out what they are.
15:31 Speaker 02 Yes, literally in the room.
15:32 Guy Raz? Okay, I got you.
15:33 Speaker 02 We were like, let's get these sheets.
15:35 Speaker 01 And interestingly, the Wynn sells everything in the room. So they have a store in the lobby where you can buy the lamps. You can bring, you can get the carpeting from the Wynn.
15:44 Guy Raz? Wow.
15:45 Speaker 01 At your house if you so choose.
15:46 Guy Raz? So you go to the shop?
15:48 Speaker 01 Yep.
15:48 Guy Raz? And you find the sheets?
15:50 Speaker 01 We found them and we were so excited that we found them, gonna bring them home. And this is another important moment to note that I was unemployed at the time and she was the breadwinner working as a PR assistant. So when we took a look at the sheets and the sheet set was $450, the duvet cover was about $350 and the pillowcases to match were about $150. So we put that all together, you know, we're just under $1,000 for that set of sheets, which, yeah, we put them back on the shelf.
16:21 Guy Raz? And was it like 500 thread count? Like, what, why were they so expensive? I mean, obviously there's a branding thing there and, but presumably they must have been, you know, well made.
16:33 Speaker 01 Presumably, but, but we didn't know anything. It just felt good to us. And to be honest, at that time, we were like, oh, the higher the thread count, the better, which, you know, now we know is a bit of a fallacy.
16:44 Guy Raz? Yeah.
16:44 Speaker 01 But at that point, that's all we knew.
16:46 Guy Raz? Right. All right. So you have this experience. Lots of people have had this experience at hotels. Great sheets or great bedding or great pillow. And you go back to New York and did you keep thinking about those sheets?
17:00 Speaker 01 I did. Yeah. I am very persistent on that kind of thing. So I was digging deep to figure out who the manufacturer is, where they come from, why are they so great? I found myself in, in forums and on these old.
17:14 Guy Raz? Like internet chat rooms?
17:16 Speaker 01 Internet chat room type situations.
17:18 Guy Raz? What, because you were looking to buy the sheets, what, like in a cheaper way?
17:23 Speaker 01 Yeah, kind of, you know, see if, see if a set fell off the truck somewhere or something. I don't know.
17:28 Guy Raz? Yeah.
17:28 Speaker 01 Just kind of trying to, to work around, you know, to get those thousand dollar sheets. And to be honest, the, the most surprising thing at the time was I found out I wasn't crazy. There was dozens, if not hundreds of people on these threads, all talking about the same thing, trying to do the same thing and chatting and strategizing about it.
17:46 Guy Raz? About these sheets at the Wynn Hotel?
17:48 Speaker 01 Exactly.
17:50 Speaker 02 Yeah, I remember that was part of why it eventually led to starting the business was in Rich's deep research. I was like, why can't you just get them from the manufacturer?
18:00 Guy Raz? Yeah.
18:00 Speaker 02 And that's where kind of we were like, why can't you just get sheets from the manufacturer? That seems so much smarter. Why doesn't that exist?
18:09 Guy Raz? Meantime, Rich, you start business school. And, um, and do you continue to think about sheets when you get to business school? Or do you kind of hunker down and do the business school thing?
18:21 Speaker 01 A little bit of both. Another thing happened at the time that, that kind of got my gears turning was I was preparing for recruiting and interviews in business school. I got myself a new suit and someone referred me to this custom suit manufacturer in the city. And it was a great experience. You go up into the showroom, they show you all. All the fabrics, you choose what type of fabric, the design, and they they custom fit it to you. And I never had that experience before. So then, you know, I circled back to the sheet idea and, you know, was thinking about a new sheet concept where you can customize your own bedding ensemble. And that was like really where there I thought, OK, maybe there's some sort of interesting business idea around that.
19:07 Speaker 01 I thought it was a good opportunity to kind of put pen to paper. But the turning point was January 2013, when I was on my winter break between my first and second semester. I was home with Vicky, and I remember telling her that I was kicking around this idea for the first time, actually. Like, I'd heard for years, that's a stupid idea, that's a stupid idea. This one, she was kind of like, you should just go for it. That's actually a really good idea.
19:31 Guy Raz? And what was the idea you were you were talking about, custom sheets?
19:35 Speaker 01 Yes.
19:36 Guy Raz? So custom sheets, people could order the bed sheets that they wanted.
19:41 Speaker 01 Correct.
19:41 Guy Raz? OK.
19:41 Speaker 01 Choose your fabric, choose your designs, made for you.
19:45 Guy Raz? Got it.
19:45 Speaker 01 A key piece, actually, was also was was I wanted something that was gender neutral, because I felt like every presentation and photography and marketing only spoke to a female customer, and I felt very underserved. So I really wanted to to position this where it was accessible and appealing to to men as well, which was something that was really not being done there, and that was a different component of it.
20:10 Guy Raz? And and Vicky, you thought you thought this was kind of a cool idea, maybe, yeah, maybe there's something to custom bed sheets.
20:16 Speaker 02 Yeah, I thought it was a great idea.
20:18 Guy Raz? Yeah.
20:19 Speaker 02 I will say, I also, I think I was pretty supportive of the hot dog idea, too.
20:22 Guy Raz? Yeah.
20:23 Speaker 02 You know, to me.
20:24 Guy Raz? It's a good idea. I love those baguette hot dogs.
20:27 Speaker 01 Yeah.
20:27 Guy Raz? So you get the sort of seal of approval from Vicky, but what do you do? Like, what was your? What was the next step that you took to actually learn more about this possibility?
20:41 Speaker 01 Well, we were at the time, as far as what we were aware of, like, direct-to-consumer and direct-to-consumer brands that are born online was very, very new. So I'd worn glasses my whole life, and I'd just changed to Warby Parker. And I'd gone to Lens Crafters at the mall prior to that. But Warby Parker was a very, very interesting, focused offering.
21:04 Guy Raz? Yep.
21:04 Speaker 01 It was a cool brand that seemed like, we focused on this product, made it better. We don't care about the other stuff. We're just concentrating on this.
21:12 Guy Raz? So you were inspired by Warby Parker and those sort of direct-to-consumer models, thinking, hey, here's a category where most people just go to Target and just buy like Ralph Lauren sheets, or Laura Ashley branded sheets, or whatever. And they're probably all made in the same factory in China. And they don't really, people aren't really getting what they think they're getting. And I can do a better job. That was sort of your mindset?
21:39 Speaker 01 Yeah. And I felt like those brands and channels never stopped talking to my mom and never considered that I'm now a customer, potentially, and they need to appeal to me as a 20-something-year-old guy. And so I thought there was an opportunity for reinvention there that can speak to the more millennial customer, that ultimately cares about different things than my parents might have.
22:04 Speaker 02 Yeah. I cared a lot about the quality. I really wanted those nice designer sheets. So it was like, if you can figure out the supply chain to make these nice sheets, sheets that we can afford and people like us can afford, that's a game changer.
22:20 Guy Raz? Yeah.
22:21 Speaker 02 But we just then, it was researching, how do we back into it as customers and create this texture that we want? So I digress, but we went to Barnes & Noble. It was in Union Square, and we kind of sat down there with textile books to kind of figure out how sheets were made to achieve the feel that we wanted.
22:42 Guy Raz? Wait, you walked into a Barnes & Noble in Union Square, New York, and you just got a bunch of books on textiles? And you just read them in the store?
22:51 Speaker 01 Yep.
22:52 Speaker 02 Yes.
22:53 Guy Raz? What were you learning about sheets that, I don't know, basic, common sense wouldn't have already informed you?
23:01 Speaker 01 I think the two findings that were most eye opening was the misinformation around thread count, because if I was going to call a factory, I was going to say, and I want a high-quality product, what I would have done is said, what's the highest thread count you make? And send me samples of that. But that is just fundamentally wrong. As it pertains to sheets, thread count is actually the number of threads, vertical plus horizontal, in a square inch of fabric. So there's actually a finite amount that you can have, like it's a finite amount of space. And that number actually with true, single ply yarns is about 400, 500 or so in a square inch. Anything beyond that is just marketing, essentially, and tricks by manufacturers to really attract
23:46 Speaker 01 the consumer to some number that they could anchor them and think that, hey, it's better because it's more. The funny part is, is that as that goes higher and higher and higher, that number, anything in excess of 500 is essentially is an inferior product. It's more dense and less breathable.
24:04 Guy Raz? I had no idea.
24:05 Speaker 01 Yeah. So people think that they're getting this premium product, but they're actually just sweating their ass off at night. And they want to like it so badly because it's high thread count, but it's actually not what they're looking for. And that was when we first kind of realized, actually, what we're after is a lower thread count that's more lightweight and breathable and has that crisp, crinkly, freshly pressed dress shirt feel to it.
24:31 Guy Raz? All right. So you are doing all this research on sheets and thread counts, which I mean, it sounds really interesting, actually, because we spend a third of our lives sleeping. So a third of our lives are going to be spent on bed sheets, which, when you think about it that way, that's actually, bed sheets are a pretty significant part of our lives.
24:52 Speaker 01 Definitely, and everyone's a customer theoretically.
24:56 Guy Raz? It's amazing. So, okay, so it sounds like Rich, like this idea is obviously getting traction in your head, right? And so at this stage, do you like start calling around to find manufacturers?
25:10 Speaker 01 Yeah, I started cold calling and after I got a little smarter on the fabrics, I was calling factories all over the world, really, just to figure out and get samples and see who would deal with me. And there was tons of obstacles. And I remember one specific call, I called this guy, and he laughed at me on the phone and he said, "I haven't spoken to anyone under the age of 50 that wanted to get into this business."
25:32 Guy Raz? These are US-based manufacturers?
25:36 Speaker 01 No, no, no, no. A combination of. So I wanted US-based, but the textile industry has totally shifted overseas over the last, call it 100 years or so. So there's a few parties that remain. They're very expensive and they still do it. But I was just calling anyone and everyone that was willing to talk to me to get some samples in here for Vicky and I to look at was really, I used every moment I could before, after, and in-between classes to really pound the pavement.
26:04 Guy Raz? So you're at business school and there's other smart people at business school like you. And I guess you approached two of your classmates to kind of to join you, David Fortune, Ben Hyman. Tell me the story. You went to them and said, "Hey, I've got this idea. Do you guys want to get involved?"
26:20 Speaker 01 Yep. So first I approached Ben. Ben had a background working in supply chain in Southeast Asia. He'd lived in China and in Laos and in Vietnam. And so he knew languages and he knew how supply chains work. At this point, I'd never been in a factory in my life. So I was like, "Oh, you've been to a factory? Like, help me out. You're in," is kind of, if you're willing. And I pitched him on the idea and he also kind of had an entrepreneurial bug. And so he got in rooms with me and was calling and modeling and helping in those early days. And soon after, another weak spot was legal and accounting.
27:02 Speaker 01 David is a, he's a JD MBA at Stern. So he'd practiced law and he was also an accountant in a prior career. So we had like the three of us plus Vicky's secret weapon of this public relations and pitching. I thought we had all the ingredients to at least get the foundation of a company going.
27:20 Guy Raz? Totally. This is like the X-Men here and X-Women. The Avengers. You've got the accounting, you've got the PR, you've got the marketing. All right. So, um, so you start really kind of, I don't know. I mean, were the, were the sort of the four of you or just kind of meeting up and just kind of grinding through ideas? Um, like at night and on weekends?
27:43 Speaker 01 Yes. So we did a few things. So we would go to fabric stores around the city. We'd cut fabric and send them out to factories to try and replicate. But the most important thing we actually did was we went and we surveyed about 500 prospective customers, really by hand and live. So we went to, first we went to like the big box stores and department stores. And we would just nag people in the bedding section and say, hey, you have a second. A lesson we learned is an easy way to disarm somebody for a quick survey is let them know it's a student project. And it very much was at the time.
28:17 Guy Raz? So. What, what were you asking?
28:20 Speaker 01 What are you shopping for? Why did you come here? Where'd you previously shop? What are you willing to spend? Why are you searching for this particular fabric? Or what brands are you aware of? It was, it was like a rapid fire. I would call it 10 questions or so along those lines, just to prove that there, we weren't crazy and there was some sort of market here.
28:38 Guy Raz? And what kind of trends did you find out of interviewing 500 people? Because, you know, Jen Rubio and Steph Corry did a similar thing with Away. They went to hundreds of people and said, what kind of suitcase do you want? And, and the answers they got, if they took into account all the feedback, would have been a suitcase that nobody wanted. Cause it would have had everything on it and it would, you know, all the bells and whistles. And it would have looked like a Frankenstein suitcase. So how were you able to look at the data and the trends and say, okay, this is actually, it looks like people really want this. What, what was the this that you were seeing?
29:09 Speaker 01 So the feedback we got was, I don't know, I need new sheets. I guess I would just come here. What brand do you love? I don't know. I don't know any brands over here. How much are you willing to pay? I don't know, a hundred bucks or so. People didn't really think about, you know, where does the cotton come from? There's all different kinds of cotton, whether it's Pima cotton, Egyptian cotton, Turkish cotton, and so on. Like, they all feel differently. All the different weaves that you have, if it's a jacquard weave, or percale weave, or satin weave. There are so many variables and nobody knew the information.
29:38 Guy Raz? Yeah.
29:39 Speaker 01 I wish there was a better solution is kind of what boiled up to the top.
29:41 Guy Raz? Although, here's my question, right? Because at the time, I might have said to you guys, I don't see why this is a problem. I mean, if I go to Target and it says 1,000 thread count, and it's on sale, and it's, you know, the price tag says 89.99, but it's on sale for 49.99. I'm thinking, I'm getting a great deal here.
30:00 Speaker 01 It really had to do with the branding guy. Like, there was no brand that spoke to people. And people are so brand obsessed in every category. And this was one that just was there for the taking that nobody really could hook into.
30:13 Guy Raz? There was no Nike of sheets, or there was no Warby Parker of sheets.
30:18 Speaker 02 Right.
30:18 Speaker 01 There's no Warby Parker, there's no Nike, there's no brands that people can align with and say, I like the look, I like the value, I like the price point. Like, it speaks to me as a customer. There was just nothing out there that did that.
30:33 Guy Raz? Got it.
30:33 Speaker 02 And for us personally, also, I felt like shopping for them was, I think, kind of a chore. So we also thought the direct-to-consumer model, it'd be nice to not have to go to Target or Bed Bath Beyond. Just make it a little bit easier and a little bit more frictionless.
30:50 Guy Raz? So you've got some research under your belt. And so at this point, you're not really using a whole lot of money, right? This is like the spring of 2013. You don't require a whole lot of money. I guess you are calling up factories and getting samples, but you're not really spending a lot at this point.
31:08 Speaker 01 Yeah, we're spending thousands of dollars. So I would say hundreds and thousands, not hundreds of thousands.
31:14 Guy Raz? And how did you have even thousands?
31:17 Speaker 01 We put, I mean, the four of us, you know, used our savings that we had, honestly, that we had tucked away. And this was kind of what we put it towards. If I remember correctly, we put in about $4,000 or $5,000 a person to incorporate and start the business. And that was it. We put it into into the pot. We did it on like legalzoom.com and we incorporated here in New York where where the taxes and everything are like the least favorable. We did everything wrong, of course, but but we did the cheap way.
31:45 Guy Raz? All right. So you so I guess in the summer of 2013, you and and David, David Fortune, you go off on a trip to try and find a factory that you can work with.
31:58 Speaker 01 That's correct. Yes.
31:59 Guy Raz? And where did you go?
32:01 Speaker 01 I think we went to France and Israel. So what we were looking for was a factory that kind of ticked the boxes of what we wanted to deliver to our customers. So China was problematic for us to start as we called and got more familiar with how business is done there. And Ben was familiar with this as well from having lived there. It's a very complicated place to do business. First is MOQs or minimum order quantities. They're extremely high. So I remember getting on the phone with them and they're like, how many containers do you want to order?
32:32 Guy Raz? Wow. Right.
32:34 Speaker 01 It was like, it was kind of like click at that moment, like where we got the wrong conversation. Yeah, we're talking in like, how many fitted sheets and pillowcases, not not containers, is really.
32:44 Guy Raz? That's interesting, because I interviewed Sarah Kaus of Swell, and she said that she could get a small run, product run from a factory in China that with her bottles, it was actually pretty easy. So it may just be different in textiles?
32:59 Speaker 01 So textiles are totally different because when you think about how big a like uncut textile is,
33:05 Guy Raz? Yeah.
33:05 Speaker 01 It's just not, you have to run thousands of yards of fabric through a loom to weave it in any particular color or fabrication. And then to cut and sew, you need, you think about if you spread out a king sized sheet, the cutting tables and facilities you need to do that on a one off basis.
33:21 Guy Raz? Massive.
33:21 Speaker 01 Yeah, massive. So we, you know, we built relationships along the way where, you know, they were willing to take a chance. The factory ultimately went with, was willing to actually take a chance with us and.
33:30 Guy Raz? Wait, but, but you decided to go to France and to Israel to look for a factory. Why those two countries?
33:37 Speaker 01 It was kind of the results, two leads. After a whole lot of cold calling and sampling, we kind of just whittled it down to find our best contenders. And then David and I had a connecting flight through France. We made a pit stop there and then went, continued on to Israel. We ultimately found our factory there. Checked all the boxes we were looking for.
33:57 Guy Raz? A factory in Israel? And, and what, I mean, I didn't even know they, they have textile factories there.
34:04 Speaker 01 They have a few, not many. But I went there and I met the CEO and the team there. And I had a little bit of advantage that I'd went to Jewish day school when I was little. So I understood Hebrew and I didn't tell them that. But when I was there, they were so thorough and honest and informative. And when they were speaking amongst themselves, that it left me a really good impression. They were just, show him the dyes, show him the sourcing of the dyes, show him the fabric, show him this, show him, show him the machinery. Like they wanted me to see everything and they were so proud of, of the work and the facilities of the team. We knew that they had quality. So we kind of piggybacked on, on a few production runs to run,
34:48 Speaker 01 I don't know, $10,000, $15,000 worth of bedding that they actually fronted us at the time.
34:54 Guy Raz? And what would $15,000 of the bedding get you? Like how many sheets?
34:58 Speaker 01 Couple, one to 200, one to 200, I would say.
35:01 Guy Raz? Wow. So that's not, I mean, that's really small.
35:03 Speaker 01 Yeah.
35:03 Guy Raz? And by the way, do you still work with them today?
35:05 Speaker 01 We do. Yeah.
35:06 Speaker 02 And we've grown our businesses together.
35:08 Guy Raz? Wow.
35:08 Speaker 01 Yeah.
35:09 Guy Raz? Okay, this is, here's something that I read, which is interesting, and I think, if it's true, really smart, which is you actually deliberately looked at factories in countries that have free trade agreements with the US because you thought that would be a way to save on tariffs. Is that true?
35:26 Speaker 01 That is correct. So, all those countries, with the exception of the European ones, all have free trade agreements with the US. So Peru, a lot of Central American countries, Japan, Korea, Israel, they all have, so there's absolutely no tariffs or duties coming in on the goods.
35:42 Speaker 02 Canada.
35:43 Speaker 01 Canada as well, who we spoke with, and we make our down products all in Canada from Canadian inputs and down. So that was a key piece of ultimately bringing that supreme value proposition to the customer. Because at the end of the day, all those contribution costs, the customer ends up paying for them in a multiple of that. So they don't see it, but every little thing that's done, they end up footing the bill for it. So we thought we can give a great product at a pretty compelling price to the customer, and we just whittled it down to that.
36:11 Guy Raz? Right. Meantime, Vicky, you are still working at the PR agency while Rich and his other partners are kind of getting the gears in motion, right?
36:21 Speaker 02 That's right. I'm still plugging away.
36:23 Guy Raz? Paying the bills, helping to pay the rent.
36:25 Speaker 02 Exactly. And feeling sheets at night and working with Rich on the, on the actual design and just kind of waiting for them to get all of these ducks in a row, essentially.
36:37 Guy Raz? And when you finally incorporated this company in August 2013, what was it called?
36:44 Speaker 01 It was called, I think at that point it was Brooklinen, which we are. So the original working title was
36:50 Speaker 02 Sabanas?
36:51 Speaker 01 Sabanas, which is sheets in Spanish, believe it or not.
36:55 Guy Raz? Sabanas. That was gonna be the name of your company?
36:58 Speaker 01 Yeah, it was a little too generic.
37:01 Guy Raz? Sabanas.
37:02 Speaker 01 Yeah, but it's, that didn't work out.
37:04 Guy Raz? How could you sell those in Spain or in Mexico? It would just be called Sheets.
37:08 Speaker 01 Yeah, that's kind of what we thought also. It didn't really work so well. But Vicky and I went and we met somebody at a party at some point, and she was kind of like, "Oh, what do you guys do?" And we said, "Oh, you know, we have this business based in Brooklyn and we're making linens." And she's like, "Oh, Brooklinen, that would be great." And we're like...
37:29 Speaker 01 Interesting. Yes. You know, we were looking for something that's a unique word. We also thought, you know, this is where we are. We were working out of David's apartment in Brooklyn at the time, for the most part. So there was something to who our customer was here and the branding and our taste that could be useful to kind of hook the brand onto.
37:47 Guy Raz? Wow. So you got the name Brooklinen, which is great. I mean, perfect. You're in Brooklyn. You live in Brooklyn, you're making linen. So what did you, what did you do next?
37:57 Speaker 01 Yeah, so between August 2013 and April 2014, when we launched, we were kind of just working on the idea and figure out, you know, how are we going to fund this? How are we going to market this? Where we, you know, how do we get into production and so on? What happened was in that timeframe is we couldn't raise a dollar. Everybody thought it was a pretty stupid idea.
38:19 Guy Raz? You went to actually to investors and you started pitching this already in 2013?
38:26 Speaker 01 Yep. Our Hardcore Bundle, which is our flagship product, it comes in like this briefcase box with a handle.
38:33 Guy Raz? And the bundle is a flat sheet, a fitted sheet, two pillowcases and is that?
38:38 Speaker 01 It's seven pieces. It's like the whole bed.
38:41 Guy Raz? The duvet, okay.
38:42 Speaker 01 It's a duvet cover, the duvet cover, four pillowcases, flat sheet. It's the whole shebang, which is typically not how they're merchandised also. It's usually very piecemeal. So we wanted to incentivize people and make it easy by bundling.
38:52 Guy Raz? And you had, you had that factory in Israel make those samples for you. So you have them.
38:57 Speaker 01 Correct.
38:57 Guy Raz? And you were keeping them at your apartment?
38:59 Speaker 01 Oh, yeah.
39:00 Speaker 02 That's right.
39:00 Guy Raz? So you go to investors and you'd show them this stuff and you would say, hey, we're going to totally disrupt the bed linen industry. And they would say, awesome idea. Here's a million dollars.
39:12 Speaker 01 Yeah, no, that's not at all.
39:15 Speaker 01 We heard no, we heard stupid. Well, with VCs, you don't really hear no, which is the frustrating part. You hear, you're too soon, you're too late, let me think about it, check back in with me, you know? No one really wants to tell you, no, that's stupid.
39:30 Guy Raz? No, because they don't want to be the person that you talk about on this show five years later.
39:35 Speaker 01 Right. I have a mountain of chips on my shoulder, though, from these people that I could tell you, because I heard it so many times. Yeah, so the only investor, the only institutional investor that took a chance on us was, believe it or not, the NYU Venture Fund. So here we are, four NYU students, and NYU was willing to write us a check at some point. It wasn't pre-launch, but that was the only institution that was willing to write us a check. And that check was ultimately for, I believe it was $100,000 or so. And that was the biggest check we've ever seen.
40:07 Guy Raz? But I'm assuming that even with that check, like, that money is not going to go very far, right? I mean, weren't you guys, I don't know, like, getting nervous at this point?
40:18 Speaker 01 Yeah, so we're all in school, in business school, and we're all hedging while working on this. We're all interviewing, whether it's consulting or different roles.
40:28 Guy Raz? Because you're taking out big loans to go to business school.
40:31 Speaker 01 Definitely.
40:31 Guy Raz? And I guess at roughly the same time, I should mention here, from what I understand, Vicky, and this is not to embarrass you because it turned out to be fortuitous, but you were fired from your job, your PR job. Is that right?
40:45 Speaker 02 That is absolutely right. I mean, extremely scary at the time because I was the only one of us working. Health insurance was a big concern, and we took, I think, a few more loans out to be able to support ourselves. So I was fired from my job, you know, no cause or anything. I was just let go.
41:06 Guy Raz? Just to cutbacks or whatever.
41:08 Speaker 02 As far as I know. And it was kind of a crossroads of, do I go all in on this business, knowing that if it doesn't succeed, we're not really sure what our future will hold, or try to find a new job so that we can have a stable income? And decided to at least roll the dice and see where we landed after that.
41:30 Guy Raz? Yeah.
41:31 Speaker 01 And the clock was going to start running, and we all knew this. So after winter break, January 2014, Ben decided to leave. So we were still in the development process. We hadn't launched yet. He essentially got an offer he couldn't refuse from Samsung in Korea. And, you know, he was staring down the barrel of his student loans and really, you know, taking his chances on this idea that everyone seems to be telling us no about. So he took the offer with Samsung and went his own way at that point. And it was down to me, Vicky, and David to get this thing launched.
42:11 Guy Raz? When we come back in just a moment, how the first big shipment of Brooklinen sheets got stuck at a shipping yard in New Jersey, and why sending those sheets off to customers became a major pain in the butt. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR.
42:34 Guy Raz? Hey, welcome back to How I Built This. I'm Guy Raz. So it's April 2014, and Vicky Rich and their remaining partner, David Fortune, are trying to get Brooklinen off the ground. They're low on money, and the clock is running down. So they decide to launch a Kickstarter campaign. But first, they want to generate some buzz about the brand, so they reach out to some influential publications and writers.
42:59 Speaker 02 The plan was, OK, we're going to get a set of samples of basically sheet sets that we are going to give away in hopes that these writers would actually like our product enough to then write about the fact that we were doing a Kickstarter to raise money to launch our business.
43:19 Speaker 01 Yeah, I mean, what people don't realize, myself included, and most people, is that journalists and writers aren't just discovering things on their own and spinning their wheels to figure out something to write about. They're pitched constantly, and they self-select what they want to write about.
43:34 Guy Raz? Yeah.
43:35 Speaker 01 It's funny, we talk about this. Like, my mom, to this day, whenever we get a PR placement, Vicky works in our team, work really hard to get those placements. And they're like, how did The Wall Street Journal know to write about you guys? That's amazing.
43:48 Speaker 01 It's like, that's not really how it works.
43:50 Guy Raz? Because we've been knocking on their door for 10 years, five years, Mom. Yeah, no, right, right.
43:55 Speaker 01 I think a piece that was skipped also was how we got in front of these people is pretty funny.
44:00 Speaker 02 Oh, yes.
44:02 Speaker 01 So I remember, like, it was yesterday, where Vicky, me, David, and David's girlfriend at the time, Tina, who is now his wife, we're in an apartment, and Vicky's writing these handwritten notes.
44:13 Speaker 02 60 handwritten notes.
44:15 Guy Raz? Wow.
44:15 Speaker 02 The notes were key, because otherwise it would just be some random, like, who's sending me this random? A package.
44:20 Guy Raz? You see them, you notice them, right? You notice a handwritten note.
44:23 Speaker 02 Yes.
44:24 Speaker 01 Yeah, so we're all packing and boxing. We chose queen size for everybody was the whole production run because 65% of beds are queens. So we figure we'll, we'll play the odds that this is what they need. So we boxed them all up in the apartment, 60 sets and handwritten notes. We rented a U-Haul van and we had like this, this itinerary of all these addresses up Sixth Avenue and Third Avenue of where all the journalists are. And we just pull up in front of the mailroom, we hustle in, drop off the packages with the notes and then continue on and cross our fingers.
44:58 Guy Raz? Okay, and you're doing all this right to generate buzz for the Kickstarter? And what, what was the goal you set, by the way?
45:05 Speaker 02 So our goal was $50,000 on Kickstarter. And the way we thought about that was we want to get a really aggressive number so that if we don't hit it, like we know there's no interest, or we really have something here.
45:19 Guy Raz? And how much did you end up raising?
45:22 Speaker 01 $237,000.
45:24 Guy Raz? Wow. You like exceeded your goal by times five. I mean, that's incredible.
45:31 Speaker 01 Yeah, we were there in like two or three days.
45:33 Guy Raz? So when all this traffic came in from those bloggers and, and people that you dropped off the samples to?
45:38 Speaker 02 Yes.
45:39 Speaker 01 I would say most of it.
45:40 Guy Raz? Right. So what, what was the offering? Like if you, if you gave a hundred bucks, you got a sheet set, something like that?
45:46 Speaker 01 Yeah, our seven piece with duvet cover with everything and free shipping. Yeah, I think we are offered it at about 150 bucks.
45:53 Guy Raz? And by the way, how much does that cost today?
45:56 Speaker 01 That same product today costs 225.
46:00 Guy Raz? Oh, wow. So you got a good deal back in, back in 2014?
46:03 Speaker 01 Yep. By some stupid entrepreneurs that didn't know what they were doing.
46:07 Guy Raz? Right. Okay. So basically you, you were, this was going to be a big money loser. You didn't realize it at the time, but you get $236,000 in. Obviously Kickstarter gets its cut, but you're left with this money and now you've got the money to do a legitimate production run, right? And how many, by the way, how many people did you have to send bed sheets to?
46:28 Speaker 01 1,750. Yeah.
46:30 Guy Raz? And, and did you have a fulfillment center? You know, like, how are you going to actually get the sheets to the customers?
46:39 Speaker 02 So we got space in Greenpoint, which is a neighborhood in Brooklyn. I believe it was about a 2,000 square foot.
46:47 Guy Raz? Warehouse.
46:48 Speaker 01 I wouldn't know if I'd call it a warehouse.
46:50 Speaker 02 Well, we weren't. No, no, no, it was not. It was just a big room. I'm not sure if it even had heat, to be honest.
46:55 Guy Raz? Yep. Okay. And then, and then you put the order in with this factory in Israel.
47:00 Speaker 01 Yep. So we, and the Kickstarter finished in May 22. We were on course to fulfill in 90 days, which we promised on our Kickstarter page would have been August. But of course, whatever can go wrong, does go wrong. We were all set to go. But then all the goods came in and we didn't have our import bonds in place. We didn't even know what that was to legally be able to import goods into the country. So all of our goods were seized at the ports.
47:28 Guy Raz? Oh.
47:28 Speaker 01 In August.
47:29 Guy Raz? What, what paperwork do you have to do?
47:31 Speaker 01 So you need a trade bond in place. That's something that you have to register for every year on, for the right to import goods.
47:39 Guy Raz? And you did not know this?
47:40 Speaker 01 No, no, no idea. All kinds of paperwork. I didn't know what a bill of lading was at that time or a commercial invoice, you know, to declare. There's just a lot of like complications with logistics. We just had no idea what we're doing. We told them, you know, send us the paperwork and put it on the boat and we'll, we'll go collect it. You know, so we didn't really understand kind of the scale of what we ordered for these customers.
48:00 Guy Raz? So how did you get them? And they're seized at what? I guess New Jersey is where the big shipping guards are, right?
48:05 Speaker 01 Exactly. So I, I got a zip car in the city. I, I went from, to Jersey. I drove to the shipping yard. Honestly, I don't know if anyone's ever seen on like the Jersey Turnpike, you see you pass all those containers.
48:18 Guy Raz? Yeah, yeah, yeah.
48:19 Speaker 01 I, I drove in there and that complex is huge. And I was just banging on the door and I'm like, somewhere in this yard of thousands of containers, I need to find mine and get it out of here. Like, tell me what I need to do.
48:29 Guy Raz? Wow.
48:30 Speaker 01 Ultimately found a way to get it released and it cost us probably two weeks, which was very frustrating from a customer relations standpoint, because we promised we'd be fulfilling and we were late. And that's the last thing you want to do with a consumer is, is have their money.
48:45 Guy Raz? Cause you, you raised the money. Yeah, you raised the money in May of 2014. He promised to deliver in June of 2014.
48:51 Speaker 01 Yep.
48:52 Guy Raz? And at this point, it's what?
48:55 Speaker 01 August.
48:56 Guy Raz? August. Okay. Are people writing in like, where is it?
49:00 Speaker 02 So can't remember, Rich might have even taken a picture at the shipping dock to at least share with customers and say like, hey, we're stuck in customs. We're trying. People were appreciative that at least, you know, they knew where their stuff was, even if they were really delayed in getting it.
49:18 Guy Raz? Yeah.
49:18 Speaker 01 The worst thing you can do from a customer service standpoint, and we learned this lesson very early, is just say nothing, honestly, and just go dark and, you know, under communicate. That just frustrates people and always better to over communicate.
49:30 Guy Raz? So, all right, you eventually, the sheets presumably get released. You got 1,700 to fulfill. And are they all, you just get like, is it all prepackaged? You just have to like, take them off the pallets and put a shipping label off and just send them out to people?
49:45 Speaker 02 No, we were building the boxes ourselves, putting the handles into the box. Each box. We built a little assembly line. It was me, Rich, David, and David's girlfriend, Tina, who's helping us out very generously, donating her time. And yeah, we were building each box, packing the sheets into the box. We also really wanted to make tote bags to package the sheets in. And we thought that, you know, it was like an eco-friendly way to send people their sheets instead of sticking them into plastic. So we were taking the plastic covers off, putting the sheets into these tote bags, putting the tote bags into the box, taping the box.
50:23 Guy Raz? Wow. How long would it take you to assemble one order?
50:26 Speaker 02 Like a 20 minutes, 10 minutes?
50:28 Guy Raz? What?
50:28 Speaker 02 I was slow.
50:29 Guy Raz? 10 minutes? Wait, why was it so complicated?
50:34 Speaker 02 Because you gotta build the box.
50:35 Speaker 01 Yeah, well, we have to build every order custom. So everybody had a custom ensemble of mixing and matching fabrics. Also, we had no warehouse system, so.
50:43 Guy Raz? Oh, you could get different colors of fabrics in your order?
50:46 Speaker 01 Yeah. We, you know, we were, and it's just please the customer. So we had six patterns with, with our Kickstarter. We said, mix and match, do whatever you want, kind of, tell us what you want. Huge mistake.
50:57 Guy Raz? You're saying people could do like, like pinstripes and whites and grays in the same box?
51:03 Speaker 01 Oh, yeah. And, and this is like amateur hour here. Like, we had no barcodes on the boxes.
51:08 Guy Raz? So you didn't even know what was in there?
51:10 Speaker 01 No, we would just tear open boxes and hope, you know, check to see if it was the right size and be climbing all over. This whole room was filled essentially to the ceiling, like packed to the gills with boxes and pallets. And we're literally climbing on top of these mountains of boxes, tearing them open and hoping that it's the right size and color in there. Like, it was just a comedy of errors.
51:30 Guy Raz? How long did it take you to finally deliver the sheets to the backers? When did you finally do that?
51:36 Speaker 02 What was it, two months, Rich?
51:38 Guy Raz? After you got them? So this would be like September?
51:41 Speaker 01 September, yeah.
51:42 Guy Raz? And were you still going out trying to raise money?
51:45 Speaker 01 Oh, yeah. We had to, because we really wanted to launch the business in, at Ecom and, you know, have a real standalone business, not just a Kickstarter flash in the pan. And we knew time was not on our side, because we had momentum at that point. And, you know, we would be, we would be kind of, kind of out of it if we waited too long.
52:04 Guy Raz? So when did you launch your, your website?
52:07 Speaker 01 October. October, yep.
52:09 Guy Raz? And, and just out of curiosity, you raised $236,000 from Kickstarter. Some of that went to Kickstarter. The rest of it, you had to pay to manufacture all this stuff.
52:21 Guy Raz? How, how close were you to running out of money?
52:24 Speaker 01 I mean, we were, we were out of money. We were over. Like, we didn't, we had to make it work somehow. And we, we kind of were constantly shuffling the deck. It took, I got back on a plane alone to go back to the factory in, in Israel and talk to them. And I said, hey, we want to scale this thing up. And ultimately, I convinced them to front us the inventory without paying and give us, you know, some sort of favorable terms. And I said, I promise you that the next order will be twice as big if you just give me time and the flexibility to sell this down. Just take a chance on me, because it's pretty small at this point. And, and they did. They believed in me. And they, they sent it without us sending them a dollar.
53:04 Guy Raz? That's amazing.
53:06 Guy Raz? What I'm wondering about is when you, when you launched, right? I read that you actually sold out a seven month inventory in four days. Like, there was a clamor for this.
53:19 Speaker 01 Yeah, we built up a lot of buzz ahead of launch. You know, we're launching next week, you're a company, we had a landing page, we had a countdown, we had a lot of stuff. We tried to just, you know, bottle up as much of what we could and then, and then execute as soon as we went live. And we spread the word and Vicky wrangled all the media and had them lined up to go live, you know, right when the site did and all in, on concert. And we just blasted through our inventory. And it was, it was a really funny moment because we were so excited that we had, you know, a few hundred orders and we're high fiving and celebrating. And then we realized we had no more inventory to sell for the next month or two. We had nothing on order because we didn't realize how like replenishment works and forecasting and different things.
54:04 Guy Raz? So that's just, I mean, it's, I mean, how did you deal with that? Did your website crash? Is this, this is still the four of you, right? Running this company?
54:14 Speaker 01 It's three of us at this time. It was, it was me, Vicky and David.
54:17 Guy Raz? Right.
54:18 Speaker 01 And then actually, we came out of the gates and we had a wildly successful launch. And then that is when David resigned, actually. He got, he, he went through with the launch. Well, his girlfriend at the time wanted to move back to San Francisco where she'd grown up and had roots. And he had a difficult choice to make and he moved out to the West Coast with her to pursue a family life with her. And it was one of those moments that was very, very critical to the future of the business because Vicky was not pulling a salary at that point for us. So I was, and David and I were pulling very small salaries. We had prorated $50,000 or so we gave to ourselves at that moment.
55:01 Speaker 01 So by him resigning, she was able to take his salary and ultimately have us press on for at least a few more months to see what happens.
55:11 Guy Raz? Phew, that must have been intense right then as you're starting to kind of get some traction. But it sounds like you hit cruising altitude really fast. I mean, I think 2015, you did three quarters of a million dollars in revenue in that year. How were you managing? I mean, at what point did you get like a fulfillment center and people to sort of help out? I mean, I'm assuming even with 750,000 revenue, you can't hire lots of people because most of that money is going to make more product. But how were you dealing with the demand?
55:46 Speaker 02 We did everything ourselves.
55:48 Guy Raz? Yeah.
55:49 Speaker 02 So Rich went out and did find us a 3PL, a third partner for warehouse and logistics.
55:56 Speaker 01 Third-party logistics.
55:57 Speaker 02 Third-party logistics so that we weren't paying for our space in Greenpoint anymore. We were working out of our apartment, so that freed up our time to be a little bit more effective in getting the word out and operating.
56:11 Speaker 01 Yeah, I mean, we, it was really trial by fire. At that moment, I had to learn really quickly how to do the books. And I'm self-taught on all of that stuff to this day. And I have a really good handle of the business. But it was actually another thing that kind of worked in our favor because we had very little money and very little skill on this front, but we just had to know how far every dollar went. We were not venture-backed or anything, so it's, you know, every dollar counted.
56:35 Speaker 02 It made us work very efficiently and I think go as far as we could until we had to bring someone on. We brought an intern on who was, ended up being the first employee at the company. He jumped in as a jack-of-all-trades also, helping with customer service tickets, figuring out Facebook, searching for a developer. But we were doing everything ourselves until we could find someone else.
57:02 Speaker 01 Yeah, in terms of the growth, so we did, including the Kickstarter in 2014, we did about 400,000, 2015 was 2 million for the year. And then for the year of 2016, it jumped to about 20 million or so.
57:19 Guy Raz? It's just crazy. What explains that?
57:23 Speaker 02 At that point, it really was word of mouth.
57:26 Guy Raz? Yeah.
57:27 Speaker 02 Maybe just a few more placements, a few more people to help turn it around a little bit. That's all it could have been because we weren't doing any advertising.
57:37 Guy Raz? Here's what I'm wondering. You did this all on your own. I mean, bootstrap this thing. And in March of 2017, you actually went out and raised $10 million from VC firms, who I'm sure were beating down your door. Maybe some of the same firms who were kind of giving you the cold shoulder or just dismissing you just a few months before. Why did you decide to take outside money at that point in March of 2017?
58:07 Speaker 01 We kind of had to. We were a victim of our own success at that point. With the demand rising, we had to buy into more inventory. We were expanding our product mix. So at that point, we had multiple lines of sheets. So we had launched our lux line. We'd launched comforters and pillows. And you got to buy into all these different supply chains. We were also still six or seven people at that moment. So kind of doing whatever we could and everyone was wearing a lot of hats. I had one of those critical moments, actually, also that stood on my mind. At a time when I had trouble fundraising until we kind of hit our stride. I passed Neil Blumenthal from Orby Parker, who I don't know.
58:45 Guy Raz? Orby Parker?
58:45 Speaker 01 Yeah, so I passed him on the street, walking by one day. And I stopped him on the street because I recognized him. I pitched my idea and I told him in like, literally a three minute convo. I asked him, I was like, hey, here's my situation. How did you get out of the gates and raise money so fast? And so like, how'd you make the finances work? And he's like, we didn't. It was really, really hard. We ended up going to New Jersey and other states and talking to community banks and whoever was willing to talk to us about loans and just figuring out a way. Like, don't be attracted by the shiny VC light. There's other ways to get capital.
59:20 Guy Raz? Yeah.
59:21 Speaker 01 That was one of like, quick education I got from Neil. And in literally five minutes on the street from somebody I'd never met before, but respected his business a lot. You know, we got a bank loan that was. Not big, but it was something to help us pump into inventory. And we had a skeleton crew running, so we had to hire some people. You know, our core team, they just kind of saw, helped us build it from the beginning and super nimble, super lean, the same values of just kind of make it work and, you know, roll through sleeves.
59:50 Guy Raz? I mean, so you were doing so much work with third-party logistics teams, right? Because you couldn't afford to hire people. You needed the capital. And this is important because no bank is very, I mean, probably almost no bank was going to say, here's $10 million, here's a $10 million loan. You just were not able to, you were, no, no one can get that. That's almost impossible.
1:00:10 Speaker 01 Yeah, no, that wasn't going to happen, especially with one year of, of financials behind us.
1:00:16 Guy Raz? So you needed to go out and raise money for, for the big money. So you'd do that. And I mean, I think that year it was like almost 50 million in revenue. And, you know, you went on to open a brick and mortar store in Soho, you're now, I think you've, you went on to raise another $50 million just this past year in 2020. Let me ask you about that. I mean, is it, you know, when you're running a smaller enterprise, right? When you bring on a lot of capital, that means a bigger marketing budget and a bigger, just a bigger budget to do more stuff. And it also means for a lot of companies, you're going to spend more. You're actually not going to be profitable.
1:01:01 Guy Raz? I mean, you guys on your own were making a profit because it was, you know, your money, you were sending it out, money was coming back in. You couldn't, you couldn't waste money. You had to be really careful with it. Did you find yourself, after you raised a lot of money, that you were spending more than you were bringing in?
1:01:18 Speaker 01 Oh, yeah. We, we, we got on the drug really, really quickly with that after we raised our Series A. And it was not a fatal mistake to the business, but it was certainly a point in time that was not one that was, was easy for me as the CEO. We dropped into the negative in terms of our EBITDA at that moment. And that was really anxious times because again, I came from a business where I was counting money at the end of the day with with my father, right? Singles, you know, that was bought sandwiches and lottery tickets of like, but we had an advantage. Like in hindsight, the fact that we were trained on a shoestring with no money to fund the business from the get go.
1:02:02 Speaker 01 The bones of the business and the unit economics and the margins and everything were really, really good. And built well because they had to be in the early days because we didn't have that extra money. So we had our hands on the dials at all times.
1:02:15 Guy Raz? You built this initially on bed sheets and now you offer up like different kinds of bed sheets and duvets and pillows. And you've got
1:02:25 Speaker 01 Loungewear.
1:02:26 Guy Raz? Loungewear and you've got this whole spaces by Brooklyn where you curate really cool. I've checked it out. Some really cool furniture and lighting that you also sell. I mean, it's smart, right? Because a company that just sticks with the one thing that they make. Once a bunch of competitors come in, it can be hard to compete. Is that the thinking like you want to kind of be more than just about sheets? You want people to think of you as a home decor or like a lifestyle brand?
1:02:55 Speaker 02 For sure.
1:02:57 Speaker 01 Oh, yeah, I was gonna say, you know, we consider our category to be comfort and at home. It's not necessarily bath. It's not necessarily bedding or it's not necessarily apparel. It's just kind of you and your home and everything around you. We want to own that experience from when you get home from work and you change into your comfortable clothes. You know, you watch some TV, you go to bed, you wake up, like that entire experience of just being comfortable in your house. It's not really about like, oh, how do we make the next buck? Let's launch this product. That's not how we think about it at all. We survey our customers. We see what they want from us and what they're looking for. Spaces, for example, was a product of our customers repeatedly asking us about props on our photo shoots. Now we're like kind of secondary in the picture. It's like, where's that cool bed frame from or that night table or that or that vase?
1:03:42 Speaker 01 And like, it's really like, oh, you're interested in that. We will figure out a way to bring it to you.
1:03:47 Guy Raz? Yeah.
1:03:49 Guy Raz? So last year, 2019, your revenue hit, I think, close to $100 million. It's just incredible. I mean, you you started this in 2014. It's just insane.
1:04:00 Guy Raz? We are now in the beginning of a very different and uncertain period. We don't know how long we're going to be inside. We don't know what's going to happen to our economy. We don't know if this is going to be worse. We don't, we don't know. Are there ways you can kind of build resiliency into your business now to mitigate some of the challenges? Cause there is, I mean, there is going to be a slowdown for your business, like with every other business.
1:04:32 Speaker 02 There already is, yeah.
1:04:34 Speaker 01 Yeah, I mean, we're fortunate that we've prepared for this a long time. We actually, 2017 and half of 2018 were not profitable. And then we turned that ship in the second half of 2018 towards a focus on profitability, kind of back to our roots. And the goal was really to control our own destiny. So right now we're, we're in a decent spot, but who knows how long this will last.
1:04:59 Guy Raz? Yeah.
1:05:00 Speaker 02 And I'll add that there are some areas, I think, which, you know, loungewear, we had a couple of launches, things that we were going to come out with that we're not going to be able to launch it. But we're just going to communicate with our customers and let them know what's going, you know? That's all we can do. And humanity is, especially in a difficult time, I think, generally really understanding and trying to support each other as best they can. And that's what we're trying to do too.
1:05:27 Guy Raz? Yeah. What if sales like really, really dramatically declined for six months? Are you going to be okay?
1:05:36 Speaker 01 We're going to be fine. Thankfully, you know, we don't have a big part of our business that's exposed to our brick and mortar stores or to wholesale channels. We don't sell in the big box stores or the department stores, which are clearly suffering as a result of this with people not going out. So our business is mostly single channel e-comm. And, you know, this is, a lot of people are at home, you know, and thinking about their home environments and, you know, their, their comfort from their workspace or their bed or wherever it is. So it's not like we're going to fall off the face of the earth. Obviously, as a CEO, I'm always thinking about the worst case scenario. And what if, but it's not something that's like newly keeping me up at night in light of this stuff.
1:06:18 Guy Raz? How much of your journey and your success do you attribute to your, both of you, your intelligence and artwork and how much do you think it's because of luck?
1:06:29 Speaker 02 There's a mix. I mean, I think it's lucky. There's some things that are crazy lucky, like that Rich ran into Neil Blumenthal and he suggested that, you know, he look at banks, like that's crazy luck. But a lot of it was, was working really hard and talking to people and trying to get the word out like day in, day out, pound the pavement. So that part, I can't say it was lucky, it was just, just, you know, just doing it.
1:06:57 Speaker 01 Yeah. I mean, look, we didn't, we didn't raise a ton of money out of the gates. So I think to answer your question, it's probably 50/50. If, if Dave didn't leave the business when he did, then Vicky couldn't have come on and taken a salary, which means we, you know, we might not have been able to continue if that hadn't happened. You know, like you said, if I hadn't had that quick conversation with Neil and a thousand other conversations that I've had with other entrepreneurs along the way to find out little tidbits.
1:07:23 Speaker 02 Yeah, but it's stopping that person in the street and emailing them. I think part of it, like, and try to give that back also, like, I think Rich especially takes a lot of coffee meetings because he always talks about all the people that when he reached out to them gave him advice. So, you know, he and I both try to pee that forward.
1:07:43 Guy Raz? That's Vicky and Rich Fulop, co-founders of Brooklyn and... And by the way, do you, do you have any, I don't know, any regrets about the hot dog baguette thing? You could, you could do it. You could sell the hot dog baguettes in your brick and mortar store in Soho.
1:08:01 Speaker 02 It's not a bad idea.
1:08:01 Speaker 01 Not a bad idea, actually. I don't know. But I don't know. I think I'll save that one for someone else. You know, again, luck that I, I went for this one and not that one. You know, who knows? One of those sliding doors moment, I guess, of what could have happened. But you never know.
1:08:17 Guy Raz? You never know.
1:08:18 Speaker 01 Maybe there's another career for me.
1:08:22 Guy Raz? Thanks so much for listening to the show this week. You can subscribe wherever you get your podcasts. You can also write to us at [email protected] . And if you want to send a tweet, it's at howibuiltthis or at Guy Raz. This episode was produced by Deba Motasham with music composed by Ramtin Arablouei. Thanks also to Candace Lim, Julia Carney, Neva Grant, and Jeff Rogers. Our intern is Raini Toll. I'm Guy Raz, and you've been listening to How I Built This. This is NPR.
1:08:59 Speaker 03 If you're looking for your next binge watch or you want the latest on all the big movies and albums, NPR's Pop Culture Happy Hour has you covered. Every weekday, we are your guide to all things entertainment. Listen to Pop Culture Happy Hour from NPR.
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