His Sleep Company Might Be Worth 1 TRILLION Dollars | Eight Sleep

0:00Welcome to the Marketing School School Group. Okay, so Marketing School, S-K-O-O-L Group, right? And so this is a free group that Neil and I are doing. And what I want to do with this free marketing community is I want to build a very strong group of people that are sharing the latest knowledge, the latest trends, the latest topics, and we'll share our content as well. And we just want people to engage with each other and build a strong community, right? Because people ultimately stay for community at the end of the day. People are longing for community. And we thought with all the free content that we do, well, what's been missing a free community where we can continue to help people level up in terms of their marketing.

0:38And hopefully we can help people find jobs in the group. We can even, um, maybe even create a job board, but even offer a lot of our other content, package it up for you just to help you get better at whatever it is that you do in the world of marketing and whatever it is that you do in the world of business. Right. So Neil and myself, you know, we thought that, you know, from a retention standpoint, we do a lot, we do very well with acquisition on all the channels that we have, all the audiences that we have. But from a retention standpoint, building something that we think we can be proud of for a very long time, why not do a free group?

1:09So we have a paid group, obviously, called the Agency Owners Association. That's for agency owners. And if you want to go to that, there'll be a link somewhere over here to that. But this group will always be free. And as long as people are continuing to engage, this group's continuing to grow, then we'll continue to invest more resources into it. But we thought this was a long time coming. So you can sign up for free. You might have to fill out some information or not. You might, you will have to fill out some information just so we get a sense for where you are. And then we can start to help segment the group too, right?

1:36Based on whatever it is that you're looking for, because we want to continue to add value. And hopefully we'll have a very strong database of people and you just tell us what you're looking for, what you need, and hopefully we can make those connections. So go ahead and sign up somewhere over here and we'll see you inside. All right, marketing school listeners. This is a 20 to 30 minute segment of a full interview I've done with an amazing founder, entrepreneur, creative, visionary. You're going to get a ton of insights from this. And if you want to listen to the entire thing, go search for leveling up with Eric Su.

2:08That's the entire podcast that you're going to find. So you get 20 to 30 minutes here. And if you want the whole thing, you can just search for leveling up with Eric Su. And without further ado, enjoy the episode. This interview is with Matteo Franceschetti. He is a CEO and co-founder of 8Sleep. This is a sleep performance company, and they're valued at over a billion dollars, and they're growing very quickly. And 8Sleep, if you haven't heard of them, they are all over the top podcast. So Dr. Andrew Huberman, Tim Ferriss, everywhere. You're going to learn about his operating principles for his company.

2:41You're going to learn about how he goes about hiring. You're going to learn about how to sleep better, of course. You're going to learn about what he has coming down from a product type pipeline standpoint, I should say for eight sleep. And you're going to learn also about what he's excited about from a health and longevity standpoint. And also if they make money or not from their F1 sponsorships, all their sports sponsorships and all their podcast sponsorships. So there's a lot to cover here. I think you're going to enjoy it without further ado. Let's check it out. All right, Mateo, how are you doing?

3:09Great. Thank you for having me. Super exciting. Long time coming. It's great to finally meet you. So I'm going to jump straight into sleep first. So a lot of people want to have the best sleep ever, and there's conventional things you hear about. You need to take your magnesium. Maybe you're taking some theanine, maybe some apogenin and all this stuff. You literally run 8Sleep. It's one of the top sleep companies in the world, in my opinion. I'm biased. So what are some unconventional things that people can do to improve their sleep and their health? For sleep specifically, it's all about temperature, and temperature can be managed in a couple of different ways.

3:42Obviously, our product does that for you. But anything else you can do with temperature even before going to bed. So I'll just give you an example. Let's say you are in a hotel and there is a sauna and an ice bath. If you can do two rounds of sauna and ice bath, after that you will feel so relaxed that you can fall asleep immediately. If you don't have a sauna and an ice bath, you can still try to do the same, which is with the shower, right? So you switch between very cold and very hot shower. For some other people, even a hot bath, you know, just doing a bathtub or going to, uh, could be helpful.

4:17Um, the other big thing is usually breath work could work really well. Uh, you just need to try what was for you. For me, it's usually now you inhale for four seconds, you wait for you exhale for four, and then you wait another four, you do that six, seven, eight times, and then you will feel more relaxed. And then our whole movement, we call it sleep fitness, right? And the reason is we believe that the sleep is like fitness. It's like going to the gym. You need to be intentional about what you're doing to then get the best night of sleep. And so one hour before going to bed, you should start getting into the zone, which means relaxing.

4:54You can, I still think you can use your phone. I'm not the type of guy who will say don't touch the phone, but what matters is what you're doing on the phone. If you're chatting with your best friend about an old memory or a great time together, that is perfectly fine. You don't want to be there fighting with your boss about the next board deck. Yep. So there's all these different breathwork models, right? You do 4-4-4, there's like 4-7-8, all these things. But really what you're saying, it's whatever works for you at the end of the day, right? Correct. There are a bunch. Try all of them, see what sticks with you.

5:28Like there is another one that I usually do not for sleep, but I inhale for five seconds and I exhale for five seconds and I do it multiple times during the day and that is supposed to help you increase your HRV. Got it. Speaking about the sauna, so I've been reading a lot about this recently and there's a lot of stats now. If you do the sauna four times a week for at least 20 minutes, your all-cause mortality goes down what, 40 % or something. But most people, it's not practical to set up a sauna, right? So what can those people do? Are there any solutions for that? Are you guys going to build something like that?

6:00We're not going to build it, at least not in the short term is now what we are targeting. There are some companies working on that. Now there is plenty of evidence that doing the sauna, as you were saying, at least four times a week is really good, particularly for your cardiovascular system. So I strongly recommend that. And the other big one is ice bath. So the cold plunge, that is another game changer that will increase your HRV. Yep. Got it. And do you have a sauna at home, a cold plunge at home? Yeah. Got it. So you're doing it right before you go to bed? Yeah, I do every day. Got it. And so what happens, what's the difference between, like, let's say you're traveling, You're not doing it when you're traveling, obviously.

6:34How much of a difference do you feel? So I do a lot of sports. I work out a lot every single day, somewhere between at least an hour and a half. Sometimes during the weekend, I can go up to three hours. And so I do cold plunge every single day just to cool down all the parts of my body. But the other thing I do is in the evening when I can, I do a sauna and then I do my cold plunge. And that is a game changer in terms of relaxation. When I'm traveling, usually you can. Sometimes in hotels you find the sauna. It's very rare you find the cold plunge. But if you have a shot, just try it. So you feel a massive difference?

7:13Massive, massive difference. And if you do only cold plunge after a workout, it will just help your recovery. So if I work out a lot and I do a cold plunge, I recover, call it 20 % faster and better the following day. while instead the combination of the two is perfect if you just want to relax and get ready for sleep. Even Peter Attia talks about that. I think Peter does 20 minutes, 20 to 30 minutes of sauna, cold plunge, 20, 30 minutes of sauna, cold plunge, and he goes straight to bed. Got it. And because you run eight sleep, I'm sure a lot of people that buy eight sleep, they're trying to defeat insomnia, right?

7:52So what are some ways to defeat insomnia? And the reason I'm asking this is because four weeks ago, you know, I heard a loud noise in my room, right? And I woke up. And then for the first time in my life, I got insomnia because I kept thinking about what if I can't sleep. And then I just stayed up the whole night. And then my doctor prescribed me something. And all of a sudden, a week later, I realized my heart was pounding. I realized I had anxiety, right? And then I was talking to my coach online. He's like, there's something wrong with you. He's like, what are you taking? And we looked it up.

8:19It was a Benzo, right? It's one of those things that can, it's like a cousin to Xanax basically that I was taking. My doctor's like, Oh yeah, take it every night before you go to sleep. And then you won't have insomnia anymore. Stop taking it. Boom. Couldn't sleep again. Right before that longevity summit I was telling you about. So anyway, long-winded way of asking you, how do people defeat insomnia? Yeah, I mean, insomnia is really tricky. When we talk to our customers, one of the things they always mention is, I can't stop my mind from racing. That is a very typical problem. We are all high achievers.

8:48We all push really hard. it's really hard to just decide to disconnect and fall asleep and that is why I was talking about now getting into the zone yeah like if you were an athlete before going to bed temperature helps a lot because sometimes when you have insomnia you start moving and tossing and turning and so if the bed or your pillow they become really hot that would just make everything difficult yeah but more than anything I think is is mind control and so temperature meaning a relaxing hot bath, the cold plunge with the sauna, breath work. You just need to start relaxing and slowing down your mind.

9:28Got it. I want to stay on sleep for a little bit. Then I want to talk about the business. I want to talk about the marketing because there's a lot of exciting stuff that you're doing right now. What do you have in your sleep stack? Like what are you doing differently than other people? Or like what are you doing in general just to help optimize your sleep? So cold room, right? You have an eight sleep, obviously the cold plunge. Is there anything, Are you taking any supplements? What else are you doing? Yeah. So, uh, across the board, I don't want to say I'm a biohacker because biohackers are way more sophisticated, but I have a very defined regimen for my health.

9:59Yeah. And for sleep specifically, the lights at home, they switch to orange, a certain point in, in, in the evening because that will help melatonin. Yeah. Um, if we are watching TV before going to bed or podcast, some content, I have a set of tools on the couch from one thing that massages my feet because it will help me reduce the risk of restless legs sometimes I have restless legs I have massage guns I have balls and rollers I have compression devices I also created a prototype with our technology to cool my knees and so I use all this stuff before going to bed and I use that time to start you know calming down sometimes particularly during the weekend if I can I do a sauna and an ice bath around 6 30 7 so right before dinner yeah our bedroom is fairly cold but one thing to pay attention is when you hear people saying oh you should sleep at 68 degrees the whole night that's wrong the reason is your body temperature changes during the night and so 68 degrees could be right for one hour but not for seven eight hours right then there is the pod that so my bed gets prepared automatically by our technology I get in perfect temperature and then the temperature changes during during the night another thing is for years I tried a lot of different supplements the reality is very few people if any knows what supplements really work out there everyone talks about a B and C the magnesium the ashwagandha but no one has ever run tests at scale of what really works.

11:36And so we started doing that. And now I'm developing my own formula that I'm taking every single night. And that is a game changer because it helps me fall asleep faster. I get higher quality of sleep and then I wake up perfectly refreshed. So are you going to sell this pill? Probably. Okay. Yeah. We're working on that. Okay. Yeah. So first I want to develop something for myself and then we, we test it at scale and the data seems extremely promising. And then we'll give this elixir to everyone. That's such a good point because I take all these supplements, but I don't remember once where it's like, I feel amazing.

12:13Everyone takes magnesium, but did anyone prove that magnesium worked? One of the biggest problems in sleep and in health in general, but in sleep is even bigger. Sometimes you read, oh, this clinical study says abiency. And then you look at the study and it was a study with 15 people for five nights, right? That's 25 nights. We have hundreds of thousands of people sleeping on our product every single night. We collect 15, 20 terabytes of health data per night. And so we reach a point where we can really start testing some of the things at scale with some of our beta users, thousands of people.

12:48And in a week, we're going to have 10 ,000 nights of sleep. Got it. So I remember Harry Stebbings asked you, because you're sitting on these mountains of data, right? So you just mentioned you can come up with these different solutions. What else are you, how else are you planning to weaponize this data in a helpful way, right? From a business standpoint. Yeah. The biggest change in sleep and health, and in health it will be even bigger, is because of our longitudinal data, our device is not like a wearable. Once you install it, you keep using it just because the pain of removing is bigger than anything else.

13:22Well, instead wearable, so usually the drop after six months is pretty heavy, right? 50 % of people stops using the device. And so we have this longitudinal data where we start having your sleep and health data, heart rate, heart rate arrest, HRV for multiple years. Some of our customers are crossing the four or five years. And first we see how your health is trending, right? During these five years, how much did your heart rate change? Are you developing any cardiovascular disease? But the biggest thing in the next years will be that we will be able to predict what can happen five years later.

13:56That will be the real game changer, not even identifying, oh, you have arrhythmia today or you have a snoring or sleep apnea today is because of the trend of the past five years in 2029, this is what might happen. And so start taking action today and course correct. Got it. So is there a way you're able to say, hey, this is a potential risk and you should get this product over here and you guys get a cut from it? There is where we are exactly going, right? Maybe there are even symptoms of insomnia. Maybe there are symptoms of sleep apnea. Even they're not fully developed. And there is where we can really make a massive difference for humanity and millions of people.

14:38Yeah. Well, can't wait till you IPO. But so, cause I was talking about with my other buddies, I was like, you know, someone needs to make a toilet that can scan, you know, everything. Right. And then make recommendations for you based on what's coming. But like to your point, when I was listening to one of your other podcasts, you have something where you're collecting data for eight, seven to eight hours a day. Right. How powerful is that? Yeah. And to your point, I didn't realize this until you said it. It's like, absolutely. It's a pain in the butt to take it out. Cause I was, I talked to you about this.

15:05There were these sleep doctors that told me to remove the eight sleep because there's apparently what they said, there's, there's, there's EMF that's tied to it. I was, and they're like, first of all, like, I'm just too lazy to take it off. The second thing is that I went to you immediately and I think you have some data around this. So I really want to set the facts straight here. Like, does the Eight Sleep have EMF issues? No, it does not. There is a, we publish a blog post where people can go and just see all the data, but that is absolutely not true. So we run a test. If you go on our blog post, you will see the number and the number is so tiny, um, that it makes absolutely no difference.

15:44And it'll make no change later. Even when you guys upgrade the product, right? It's still going to be correct. Yeah, because substantially everything is in the hub that is far from the bed. And here there are just very few tiny sensors that make absolutely no difference. Got it. So maybe we'll come back to sleep in a moment. But there's a lot of interesting things you guys do from a marketing standpoint. First of all, I mean, you guys, I heard, I was listening to a Tim Ferriss podcast. Yep, you guys sponsored that one. And then Andrew Huberman. Okay, there's another one. You guys are usually in slot one or two.

16:13So it's like the first thing that they hear. How do you guys think about podcast advertising and how well has it done for you guys? Podcast advertising for us works really well. There are a bunch of caveats. The first one is I think it works well for products that are pricey. I don't think these podcasts usually move a lot of units. And so you need to be fairly expensive to be able to digest a higher CAC. I mean, a CAC that works well for your price point, which is our case, right? That work hack is very low for our price point. So that is one. Second, the reason why usually they work some is because if there is a certain affinity between the audience, the host, and the type of product.

16:58They want the credibility of the host before spending$2 ,500 on a product like ours. You also need to be aware that you need to test many. And it's almost a power law. That is what we have seen. There are some that works incredibly well, but then you should assume that the largest majority will not. Particularly right now, I think a lot of podcasters, everyone thinks that they can charge the same amount of the best podcast. And they don't realize that companies like us, we are really obsessed with the efficiency. We test you. We look at the numbers. And if the numbers don't make sense, we leave.

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19:52So welcome to the Agency Owners Association. My name is Eric Su. I do this group alongside my podcast co-host, Neil Patel. We do a podcast called Marketing School. And both Neil and I, we've been in a handful of groups. We're actually both in a group called YPO. I've been in a group called EO before, so Young Presidents Organization, Entrepreneurs Organization. And we thought it would be helpful to have a group, a peer group for agency owners where people can connect and they can all help each other elevate, right? And we know a lot of agency owners, they're struggling to grow faster. They're struggling to get more clients.

20:25They're struggling with operational issues, hiring issues. And both Neil and I have been through all that. So in terms of covering getting an agency to six figures, seven figures, eight figures, Neil, in his case, got his agency to nine figures, maybe even 10 figures one day. But we wanted to share those experiences with you to help you grow faster. And there's a lot of value in this group. You'll see below all the bullet points on the things that we currently have. and we're going to continue to add value to this group over time. And the cool thing about this group is you can cancel at any time.

20:53So there's no commitment. You can sign up right now for whatever price it says down there. It's going to continue to grow and grow. I will tell you that this group initially started at$149, and it's going to continue to rise, right? So now it's going to be the best price to get in on it. You can cancel at any time. Just know that when you come back, it's going to be at the elevated price. And that's what we thought we'd do. And those of you that are doing seven to eight figures, once you join the group, or actually you can even see it, there's an application to join a live mastermind. So this is a live mastermind that where you'll be able to hang out with Neil and myself, and we'll have other agency owners at your level, but that's for agencies that are doing seven figures and above.

21:28I think once we have enough demand for maybe the six figure groups, we'll figure something out there. But for right now, seven and eight figures for an in-person mastermind, and then online community, a bunch of other benefits. If you're doing six figures and below, you'll see that right below. And then we'll continue to figure out and grow this thing as we continue on. So without further ado, go ahead and sign up below. If it's not for you, that's totally fine too, but no commitment. Why not? If it helps you, if you think it can even help you 10X the price that you're paying for one month, then why not just give it a shot, right?

21:59So that's it for this little intro over here and just go sign up somewhere over here and we'll catch you inside. And so I think you guys test in a really smart way. So can you explain your guys' podcast testing methodology just to go a little deeper? Yeah so by now we have a very specific so first we do a pre-assessment there is a scorecard that we do internally and so we can look obviously at your ratings on the Spotify or Apple and if you are on YouTube we can see the number of views and so we immediately have a sense of what your CPM is and if you are you're not in the range. Then usually what we have seen is we test you for one or two times and by then we look at the data and we know if you will be successful or not.

22:42And most of the times, the ones that fail is because they charge too much for the number of visitors that they drive. Got it. And what CPMs are you guys typically looking for? Yeah, we can talk with my team about the exact number. It also depends because sometimes it could even be a brand exercise, right? And you might be open to accept a slightly higher CPM because it's an audience that doesn't know you yet. Um, but yeah, there are defined ranges. You actually have competitors now popping up on doing podcast ads. I don't know if they're direct competitors, but, um, you know, their, their company name certainly starts with sleep, right?

23:22So, um, I'm sure they're maybe getting a little, clearly they're seeing it's working for you guys. So they're trying to copy you guys, um, at the end of the day. So, um, what, what, well, before I ask that question, if you think about, you guys do Mercedes, I look at, there's an eight sleep thing, right? So you guys do a lot of Formula One sponsorships. What's your deal with Formula One? How has that panned out for you guys? Yeah. So we do deals across many sports, right? So there is Formula One. We just entered into tennis. So we just signed Taylor Fritz, one of the best American players. I was just with him in Madrid last week.