The Sleep Brand Founders That Refused To Rest Until the Product Was Perfect

9:20Brett McGrath:I would say definitely in the beginning, we had to make the sacrifice of profit to make the product better. The fact that we were running such a lean team allowed us to do that versus a giant company with crazy overhead. So all those savings went back into the product and we're product oriented first. And so, yeah, like it didn't make sense to, I think, a lot of companies. But the fact that we were lean, we're still profitable. And so as we scaled up and volume increased, we had more negotiating power with the suppliers. But even then, we were doing something that no one else did in the industry, which was using like prime virgin foam, which is what they call it.

10:00And they scoffed at the idea that we would take that, cut it all up, and then put it into a pillow.

10:06Brett McGrath:They're like, that's such a waste of money. Just use the scraps. And we're like, that's the whole thing. Like, we don't want to do that. It took us a couple of years to convince them. They finally came on board. Our volume increased. And so the unit economics, everything got better to a much healthier position. Then reallocating that to the product once again. You know, so we improved the fill, the fabric, the liner. And like Jen's been talking about, we kept iterating to make it better and better. I think that gave us the edge. Like, we're always product first. You're sort of priced pretty competitively.

10:37Jin Chon:because pillows can get really expensive, right? North of$250 in some cases.

10:43Kevin Chon:Yeah, they can be super premium like you're talking about. And then there's the$5 bargain bin at the big box stores. I think that we are average. I think if you do the math average, but there's very few that are really in our price point. We really focus on making it accessible for people, but not skimping on the actual production. And again, we probably give up margin there, But we're happy to do that to make sure that our customers are getting the best product possible.

11:10Jin Chon:How do you educate the customer on the problem set? Like, what pain points are you highlighting that the customer can resonate with in a space where it sort of feels like people view pillows as almost like a commodity? Like, it's something I put my head on, that's it. What sorts of things are you addressing? Throughout the 13 years that we grew, the ability to tell story really became available.

11:39Brett McGrath:And the ability to target was also another layer to apply on top. And so I think understanding the consumer where they are, especially in the adulting stage, post-college, you got some money, you're getting older, you wake up and sometimes you feel like you got hit by a truck. It's like speaking to that. And when you do that, and it's real, people relate. And they're like, oh my gosh, I do feel that way. And then you show them why, and here's the solution. It just becomes a really easy, relevant conversation to have with them, and they want to learn more. And the fact that we're providing an actual practical solution, not just another beautiful pillow, that made us stand out.

12:20Brett McGrath:I think when we started, no one else was really doing that. And yes, our prices were more expensive, but they're like, it's going to fix something, and so it was worth it.

12:28Kevin Chon:One of the biggest ways that we've grown is through word of mouth, which is strange in a digital e-commerce world. I think if someone tries our pillow and they love it, it becomes water cooler talk. They tell everyone they know about it because it's incredible. You wake up and you feel so refreshed and you feel good. Then you buy one for your mom and your sister. And then we've had customers buy tons for Christmas presents, which is kind of strange in the world of pillows. But in addition to us telling the story, I think the personal experiences that people have and the sharing that they do within their communities has really been something that's helped us grow.

13:03Jin Chon:Do you think that sharing happens organically or can you incentivize customers to actually spread the word about Coop?

13:09Kevin Chon:It's been organic to this point. And I think that that also helps us as a brand because we're not paying people to talk about us in that way, especially early on. It was legitimately like Mary tried the pillow. She loved it so much. She bought three for her best friends who were new moms and needed good sleep. And that's been, I think, paramount for us.

13:31Jin Chon:I mean, that's incredible if you can do that because your customers then effectively become default marketing organisms for the brand. And if they're telling somebody else, like to your point, if Mary is telling Jane about Coop and Jane buys a pillow, Jane now has a$0 customer acquisition cost attached to her. Yes. Right. So it's unbelievably powerful from a return on ad spend or economics perspective, however you want to slice it, if you can figure out a way to get your customers to talk about you.

14:01Kevin Chon:And it wasn't intentional of, oh, how do we get Mary to talk about us? It was, how do we make the best product possible? Because that's going to make Mary's life better. And once we made Mary's life better, she was telling Jane. And then Jane's life got better. And then she's telling Susan. And so it becomes this exponential thing.

14:16Jin Chon:Have you ever tinkered with the proper referral strategy in the business?

14:21Brett McGrath:Yeah, we have like a rewards program set up. But even without, we're just seeing like where people are hearing about us. And most of them, it's family and friends. And it's shocking how much traffic we get through that. And so, yeah, we do have a rewards program where they can get points and buy more product. But yeah, even without it, it's just organic.

14:40Jin Chon:I keep reading about this mom test. What is the mom test?

14:43Kevin Chon:Our mom has a lung condition and we sleep on our pillows eight hours a night. Your face is in it, on it, around it. And so if the quality wasn't up to par that we would want our mom to sleep on, it wasn't good enough for us or good enough for our customers. And I think that keeps the standards high and it reminds everyone how important it is to not skimp on product.

15:02Jin Chon:It seems to me that Coupa is now a sleep brand. There's so many aspects of that category that I think can be tapped into and potentially profitable. So what goes into that product extension strategy and how do you figure out what you want to launch next?

15:20Brett McGrath:The industry is pretty saturated. There's a lot of brands out there. And so at least for me, it's like, yeah, we can go into this category, but how are you going to beat them if you're selling the same product? You can't. And I think that's how we thought about the pillow too. So we look at what's out there, we look at what's actually selling and people are demanding it. And then we go to a drawing board and we sit with the product team, we're like, how do we make this better? What are the weaknesses? We look at our competitor reviews, the problems. We compile them and we're like, this is what everyone's complaining about.

15:51Brett McGrath:And we fix that. We don't want to sell anything that's not better than what's existing. And once again, it's like product oriented. And then when you market that, they're like, oh, this is better. And it's just common sense. People want to buy the better product and it pays off.

16:07Jin Chon:How do you find the right manufacturing partner?

16:10Kevin Chon:It's really difficult. When I say that Kevin and I have literally traveled the world from India, all over China, we've visited so many factories and it took a long time to find. There are only so many machines that can actually cut the foam that we need for our products because we don't shred our foam. When you shred foam, it clumps. When you cut it, it doesn't clump as much. So to reach the scale production, we actually did have to go offshore. And so it took a lot of perseverance and persistence and patience.

16:40Jin Chon:Do you think founders have to go on this sort of globetrotting expedition to find the right manufacturer? Can you leverage online tools to shortlist and say, come up with the top five before you jump on a plane? Like, how does that work?

16:54Kevin Chon:I think it's important for founders to understand how their products are made. I think there's an education part that has to happen. And I think if you are really being a product first brand, it's important for the founder to be hugely invested in that. The travel, it's fun. It's an adventure. And it's a learning experience. I think that you can start online with, you know, platforms where, you know, they list. But you'll soon find you're dealing with a trading company or the factory picture does not match the actual factory. So there's an aspect of when you're first starting up, sure, you work with what you can, and especially if you have small minimum order quantities.

17:33Kevin Chon:But once you hit scale, I think you do have to hit the road and you have to see it and verify it for yourself.

17:38Jin Chon:What is the role of your social channels as it relates to brand building? So you've got a TikTok presence, which I think has about 5 ,000 followers. You've got a much bigger Instagram presence north of 60 ,000 followers or something like that. You've got a YouTube channel. Where do these channels sit in terms of the brand stack?

18:00Brett McGrath:So I think each channel, each social media platform plays a little differently, but ultimately it's to take a moment to, you know, step into what's relevant in media and today and inject the brand and show that we understand where things are going. And here's who we are. And here's our personality. I think it's a great place to have fun. And I think it's a great place to educate, but I feel like if you just purely educate, you purely just have fun, you kind of miss it as well. And so it's a, it's a place where you need to be relevant, but also just educate and inject like the problem you're solving.

18:39Brett McGrath:And it's a delicate balance, especially as a brand. But I think that's where it's, it's, it's a little bit of science, but a lot of art, you know, and we have a team that's really trying to be on top of that and just do it in a beautiful, relevant way. That's, that feels real and not just purely manufactured. You feel like you intentionally tell a different story on TikTok than you would on Instagram? Even from like pure attention span, like TikTok's really pushed the limit of like its seconds, right? So the hook in the beginning, if you don't nail that, like no one's going to watch. I think Instagram's a little bit slightly longer format where people are trying to be a little bit more generous with their attention.

19:18Brett McGrath:And so there's like minute different aspects of that. And same thing for like YouTube shorts and things like that as well. And so I think it's really important that you know the nuances. I know it's easy to just copy and paste onto all platforms. But I think if you tweak those little things, it actually performs a lot better.

19:35Jin Chon:And PR, Jen, you've gotten a lot of it. You've been in Forbes and other outlets. How do you get PR?

19:42Kevin Chon:This is going to sound crazy, but we get it organically. I know that that's hard, right? Because then how do you duplicate that? How do you follow that? But I think it, again, comes back to the fundamentals of have an amazing product and people talk about it. There are so many opportunities that have come across our plates where it's, oh, so-and-so loves your pillow and sleeps on it and tells everyone about it and that's how we found out about your brand. And so I think, again, being the best product out there, focusing on that often gets you attention and people like you and they want to share about you.

20:14Kevin Chon:That gets you on listicles and different articles. And then I think a little bit of PR begets more PR because then you're being seen by more people And it becomes this snowball effect that really grows. We have engaged a PR agency recently, but most of the awards and all of that you see, we are not going after. That is organic people becoming aware of us and then including us. And Consumer Reports was a big part of that as well.

20:40Jin Chon:What does a good PR partnership look like? And how do you incentivize that PR agency to chase the right things? And how do they get compensated? Like, are they compensated only when you get placed in the outlets that you're targeting? Or are they on retainer? Like, how does this all work?

20:56Kevin Chon:There is a retainer. And I think a lot of it comes down to conversations and a mutual understanding of, hey, we know we're already getting all of this stuff organically. What we'd like for you to go after is this, right? And so we want to be on this specific list or we want to be recommended by, you know, these publications that maybe haven't talked about us yet that we feel is a different audience that doesn't know about us yet. And so I think that's really where it comes from is an agency that you feel like has a vested interest in your success and will partner with you and focus on the things that you really want to do versus what they're used to doing regularly.

21:32Jin Chon:Have you tinkered with influencer marketing at this point at all?

21:36Brett McGrath:Yeah, that's like a major, you know, marketing channel that I think all brands use. It's been really successful for us. But we found that more than like the mega influencers, it's been like the midsize and some micro influencers that I want to say actually have a following that they can influence. A lot of big names, you know, a lot of reach, but actually not that much influence. So it's people in the betting space, people in health and wellness that their followers really trust. Those are the ones that have been really successful for us. How do you target those folks? It's a lot of research because you can use like bots and like lists and things like that, but you got to go to their account, look at the interactions.

22:16Brett McGrath:Are there comments? Are there saves? Are there shares? That's what counts.

22:20Jin Chon:How do you think about channel distribution and which channels are most profitable for the brand?

22:24Kevin Chon:I think channel distribution is really important and to keep that tight to your chest. It's really tempting to go anywhere and everywhere that will have you. But for us, we focus on just a few small channels. And to your point, big retail was really just opened last year for us. The most profitable channel for us is Shopify. It's our D2C, obviously, because we get to control the customer journey and we get to tell them more of our story, engage with them directly. That's been the focus for us is continuing to grow our D2C experience with our customers.

22:58Brett McGrath:The reason Shopify is also so valuable is like the LTV. You own the customer, the email list, and like Jen said, you continue the story. And when new products launch, you can remarket to them. And then the AOV, like the average order value aspect on site, it's not just one product that they're looking for. You can upsell them accessory products and things like that. So that's the big lever there, much higher AOV and much higher LTV. What role does email play? Huge. I feel like these days, a lot of sites have that initial offer to new customers. They sign up, get their email, and send them the code.

23:36Brett McGrath:So that's key. I would say majority of our initial customers go through that flow. And then post-purchase experience of how to unbox, how to use the product, education, and then follow up, ask for reviews, and then sharing new products after a couple of weeks so that you stay relevant and warm. And then when the sales comes, you remarket. it's crucial. Like, I don't think you can run a D2C business without it.

24:01Jin Chon:What have you learned in terms of setting up those email flows? Like, how many emails is too many emails? And how do you nurture the customer in the right way without over communicating?

24:10Brett McGrath:My gut is like, wow, these are way too many emails. But I think you got to look at the data, right? You got to look at the bounce rate, the click rate, the open rate, all of that. It tells you something there. And so I think email is where you really got to get nitty gritty with the data and the science of it. and that tells you where to go, where to push more, where to pull back, when is email better, when is a text better, things like that. And so I think you got to look at the data, even like the headlines or even the copy of the body images, it's all data driven for us.

24:41Kevin Chon:I know for me as a customer, SMS is a huge driver of my purchases because it does grab your attention. Whereas email can be a little bit, I can disregard that email. And so I feel like there's more volume in email. We're a lot more careful with SMS.

24:57Jin Chon:Yeah. And I think brands are a little bit more hesitant when it comes to text messaging because it's that much more intimate.

25:02Kevin Chon:Yes.

25:02Jin Chon:Or at least it feels that way. Yes.

25:04Kevin Chon:But if you love the product and the brand, you're actually kind of happy to hear from them. And so that's me as a consumer saying that, because when I get the text from the brands that I love and that I shop often, and they're telling me they have a sale, they're telling me they have a new offering, I will click through and it will interrupt my day, but I am happy to be there.

25:23Jin Chon:And you talked about the importance of customer feedback earlier. So in the context of SMS, can you leverage SMS for inbound? I mean, you're obviously using it for outbound push, but can you pull and bring customer feedback in through SMS?

25:37Kevin Chon:We have not done that yet. Actually, that's a good idea. We should look into it.

25:40Jin Chon:So Coop is 13 plus years old now. You've been through a lot. Are there any big mistakes that you look back on that you think you would do differently?

25:51Brett McGrath:I want to say mistakes necessarily, but I think they were like side quests that took a lot of time and resource. We built this whole huge logistic company that was very large and it was amazing. But at the same time, it took a lot of focus and energy. And had we focused solely on Coop, I think we would have been much further along. Another one was we were invited onto this very well-known entrepreneurial pitch show that I think a lot of people know. and we just kind of stopped everything else and we focused on that, all resources. And we built this big bed where they were all going to be in the bed and with our logo on the back and had this dance and jingle and outfits.

26:29Brett McGrath:And we put so much hope into that, this home run that we're like, this is it. This is going to send us into the stratosphere. And at the last minute, on set, they're like, sorry guys, you guys can't go on. And we're like, what do you mean? Like we're here at the studio, they're right there and they called it off. Until this day, we have different theories of why, but long story short, it's like it really knocked the wind out of our sails. And so I think the lesson from that was like, don't build it for home runs. Go for the singles, doubles, triples, build the foundation in the right, healthy way, and the home runs will come.

27:05Jin Chon:The merger with Comfy, do you feel like that was a single, double, triple home run?

27:09Brett McGrath:That was a home run for us because they are the leaders in the spa space. The bedding that Comfy created, like it's the best. And it gave us immediate legitimacy into the bed and sheeting space. And so, yeah, it helped us like really leap forward in that category.

27:26Jin Chon:Well, it's been an incredible journey thus far. Congrats on all the success with Coop. And thanks so much for being here. It's a lot of fun.

27:33Kevin Chon:Thank you for having us.

27:35Jin Chon:And thank you for tuning in. If you like what you saw, be sure to hit that subscribe button below so you never miss an episode. and I'll see you next time.