The Decisions Behind 3X Revenue Growth in 5 Years

0:00We have tripled our revenue just in five short years of where we were at. They were up 157 % on the amount of goals that we set forth for the influencer team. It was huge. We only had six stores of our own stores in 2020. And we're going to have 35 by January of next year, just in the last few years. We have 220 employees at this point. Welcome to the DTC Insider Podcast, where online business owners come to find actionable tips and tactics to grow their businesses. Now, here's your host, Brian Roizenthal.

0:42Hey, welcome to another episode of DTC Insider Podcast. I'm Brian Roizenthal, and today I'm joined by Aaron Schwartz, the Chief Growth Officer of Naturepedic. Hey, Aaron, thanks for being on the show. Yeah, thanks for having me on today. Yeah, my pleasure. So why don't we start by telling the audience more about what the company does for those who don't know the company? Yeah. So, you know, we are a certified organic mattress and bedding manufacturer. We've been in business now for 23 years. We, all of our manufacturing is done in right outside of Cleveland in Ohio. And something we don't really, you know, get into a whole lot.

1:16We've been doing a little more in the last few years, but about 85 % of our workforce is Amish. So, you know, they're getting a handcrafted Amish product on top of it being certified organic as well. Nice. And how long have you been with the company? I've been in the company for 12 years now. I joke all the time with our owners that everything I've done to rise up the ladder, I've done through hostile takeover. I started off as a sales coordinator in 2014. I was in the metals industry before, and it was very stressful and very cutthroat. And it was very much, you know, in hindsight, it was very much the best learning experience I ever had.

1:55And when it came to business, when it came to interact with customers, to just be confident in myself because I was 100 % commission based. So if I didn't sell, I didn't eat. So I want to take a little bit of a breather and, you know, just kind of with my old job and it just a whole different reasons why I'm not there. But, you know, I wanted to see if I could, I had a lot of self-doubt of like, is this the right thing for me to be doing with sales? Because it was so incredibly stressful. And I thought like an organic mattress company would be low-hanging fruit. And I couldn't have been more incorrect.

2:29And what I mean by that is, you know, it was mattresses in general are a very cutthroat industry in and of themselves. And what we do with Naturepedic is how do we grow the brand with keeping our ethics in check without like stooping to, you know, certain, you know, knocking on our competition. We don't really do that. We don't really like there's not a comparison chart on our website of like us versus them. We just, you know, try and say, well, well, we're doing. And I think our customers appreciate that. I mean, being an organic company, they want to buy some from somebody who is doing the right thing.

3:02And whether that's how we make it or, you know, how we conduct ourselves, customers are a lot wiser than they used to be. Yeah. So it's been a while since you joined the company, right? It's many years now. And e-commerce was definitely different back then. Was there any e-commerce, like, strategy back then when you joined the company or was it everything offline? No, I mean, it was, we had a website. The website did, you know, okay. You know, we started out in wholesale. You know, our founder, Barry, you know, they, in his two cents, Jeff and Jason, they, they, you know, made our first prototype in their garage.

3:36And then they started literally taking it like door to door to all these mom and pop, you know, brick and mortar baby stores. We put it on the, on, online. And, you know, I think people were just, there was no sense of like, you know, SEO or a Google strategy or paid social or any of that. I mean, social really wasn't even a thing in 2003 when we first started this company. And, you know, when I came on board, I just saw the potential that we had. Like we were doing well, you know, for what it was worth for a company that we had this amazing product. How do I go out and tell the world about it?

4:07And, you know, we when I was I took over all sales in 2018 and just started building out like more of that omni-channel wholesale division of Naturopedic. to just get our brand in front of consumers as they're shopping online or even in store in certain cases with like Pottery Barn and Crate and Barrel and Restoration Hardware. And, you know, that started to build up the brand as well. And, you know, in 2021, I took over all of marketing as well. And that's what I joke about that. That hostile takeover thing is like, I'm not a marketing person. I, you know, I think after five years, five and a half years of being in the trenches, I like to think I am a little bit more now.

4:44But, you know, I had a good, we had a gap. Our old VP of sales and marketing went to go take another role and we tried out some other directors marketing. It just wasn't like really clicking with the team. And I had a good rapport with the team. And I said, why don't you just let me try it? I did so well with sales. Like what could go wrong? We're not going to do it at this point. We have nothing to lose. And it just, it just stuck. I guess I had like a knack for it. And we've had in our last five years of me being in charge of marketing. and I'm not, like I said, my team would probably burn me at the stake if I was like, oh, me, me, me.

5:17I've done a good job of hiring. My team is amazing and they do amazing work and I give them the freedom to do all those things. And, you know, I, we have tripled our revenue just in five short years of where we were at. So you're talking about, we started in 2013 and, you know, we were in business for 18 years at that point before I took over and I've tripled that revenue just in the last five years and still continuing to grow. So, you know, it's, we've made a lot of really good decisions. We've evolved with the market. I think we've really done a great job of finding out like what works for us.

5:50And, you know, I think, you know, there's a billion marketing books out there. There's a billion leadership books out there. I, you know, with, with the thousand hats that I wear around here and also being a father of four, I don't have time to read. Let me be honest, I don't have time to read. So a lot of what getting here has literally been trial and error of where, and you have to give yourself a lot of grace to fail, especially being in a leadership position, but owning that loss when you get there. And, you know, I think your team ultimately respects you for it. And, you know, I would say, you know, I've got 72 people and counting that work underneath me.

6:28Not all those are direct reports. I think I would die. Like 14 of them are direct reports. It does, but it's a challenge. And, you know, it's it's everyone is very fervent about the success of this company. And the more you can get your people to believe in your mission and, you know, it's a good sign of leadership that, you know, the people who work underneath you will. I don't ask them to. I never ask them to. I yell at them if they are. I can't tell you how many people that I have working on this team that, you know, six, seven, eight, 10 o 'clock at night. I see them working still with an air table or slack or whatever.

7:03I'm like, you've got to shut off. Like, we're not heart surgeons. This isn't life or death. But they're like, I know, but, you know, like, I want to get this done because it's so important. And they're just really committed to all of it. And, you know, again, I'd like to see it, you know, in terms of that drive. But I'm also, you know, you got to know when to push your people to take care of themselves, too. But, again, that's why we've experienced such great growth. So I was thinking of a thousand questions while you were speaking because everything was so interesting. So let's slowly break it down.

7:33So you said that you've been growing steadily for the last or triple revenue in the last few years, and many companies are doing well. Many companies are really struggling these last few years. We're brutal, brutal for many companies, not only for the socioeconomic aspects, but also the technology aspects, the competition, AI, you name it. Everything was so different ever since COVID, right, for many, many companies. And, you know, we will talk about retention, acquisition, omnichannel, everything. But I would love to start by the following. Like, what key decisions explain, let's say, that consistency better than anything else?

8:12You know, the growth, because it wasn't a one-off, one great month or a great year. What decisions explain that, you know, steady growth pace? You know, I think our ownership likes to joke around that we started this company in the middle of a recession. So we're like, you know, primed for opposition and, you know, economic tides. So, you know, that's why we haven't seen like down years of the economy tanks like Naturopedic still continues to grow. And, you know, I think largely why we've seen such consistent growth with that is we're not, we are, you know, we're an organic mattress company, but we have our baby division.

8:51We have our kids stuff. We have our adult stuff. We have our, you know, pillows. We have bedding. If any of those things happen to falter for whatever reason, we've done an amazing job, you know, shoring up every one of those specific divisions within Naturepedic to where it, you know, the rising ship, you know, takes care of the rest of the ones that aren't doing as well. So I think that's greatly helped out. Now, you know, in the last five years, there's not one sector of those key divisions of Naturepedic that hasn't grown exponentially like the rest of them. And I think one of the big things that we did, one is, you know, we used to give away so much money.

9:30The owners of our company are very philanthropic. The problem is they were doing it the wrong way, you know. And what I mean by that is nobody knew that we were doing any of this stuff, that we were giving any of this money away. and we were giving countless, you know, tens, thousands, hundreds of thousands of dollars to charities across the country. And, you know, consumers want to know that stuff. They want to know that who they're giving their money to. So when I took over in 2021, I made that key decision of, you know, being a part of our marketing of, you know, look what your purchase is going towards.

10:03And, you know, here's your money's not lining some guy's pockets. He's literally like the second it comes in, it's going out the door again. And I think that was a good bolstered things, but also extensively building out our influencer network has been phenomenal in doing that. Like we, you know, we used to dabble here and there before, and now I've got six full-time people just working on influencers. And, you know, it's the best investment that we've ever made because our return on that is amazingly huge. Could you please explain a little bit more in depth what you're doing with those six people?

10:36What's the role of each of, you know, those people and what specifically you're doing with influencers that is helping you so much? Yeah, no, no. So they're all, I mean, it's all pretty much the same role. It's just a matter of what type of influencers they're going after for us. I do have, obviously there's a manager would be chaos, but the other, you know, the other five are, you know, let's just say it's crib actresses. They're going after, you know, parenting influencers. And, you know, so there's one aspect of it. And then, you know, the adult side of stuff, the betting side of stuff. And we're, you know, going after health and wellness.

11:10We're going after parenting. We're, you know, going after everything that suits our brand. And we're finding no shortage of influencers that want to work with us. And we're also able to take all of that content that they're creating. And then we're seeing wildly successful ad campaigns just around UGC, which is great because we don't spend, you know, 50, 60,$100 ,000 on expensive photo and video shoots any longer. I, you know, I think people appreciate authenticity of, of, you know, a brand and looking like, I don't want to say unpolished, they do some amazing work, but I think, you know, it, you know, I, I, I'm not saying that the idea of a big expensive ad campaign is dead.

11:52I'm just saying that that's what's working for us as a company is leaning more on, on these people, these, you know, talking heads, if you will, about why naturopedic should be something you should have in your home. And, you know, the amount of brand awareness we get out of it, the amount of impressions that we get out of it, the amount of likes and shares is we're, you know, my social team has, you know, their own metrics of what success looks like. They blew it out of the water for Q2 of this year, just for example, they were of 157 % on the amount of goals that we set forth for the influencer team.

12:24It was huge. And I think it's, you know, just seems to be really resonating with people. So, and we're going to continue to build on a team because right now we unfortunately have a backlog of the amount of influencers that are waiting in the wings to work with us. So we're hiring even more people. We've got like 400 influencers that want to work with us right now. So that's amazing. That's a drink for many brands, but for some, they don't know how to leverage influencers. So I wanted to ask you a few questions on that. If you don't mind, first off, where do you, like, where do you use the content influencers create?

12:55Is it TikTok Shop, TikTok Organic, Instagram Organic? Is it ads everywhere? You know, TikTok is, we're not really doing a lot with TikTok, to be perfectly honest. It, you know, TikTok Shop is, and they'll even tell you themselves, is unless your product is sub 30 bucks, you're going to have a real hard time doing well with TikTok Shop. And most of that audience is, we found e-commerce way better with meta. It just is. And, you know, it might just be the demographics that are within TikTok. I mean, I'm 43 and social media is not really a part of my life necessarily, but my wife's 42 years old. She does not have a TikTok.

13:34That's mostly who's buying most of our products. So it's definitely for a younger generation. Now, there might be a point in time where maybe they move over to doing more meta, but maybe when those people are starting to age a little bit more, TikTok will be something that we look into again. But most of that is going into meta. We're also repurposing these things for CTV advertising, which is something we started two years ago, doing a lot more CTV. And again, these aren't highly polished commercials. It's literally a 15, 30 second clip of somebody with a mic sitting there talking about our bedding.

14:10They're talking about the in-store experience they had. They're talking about just our mattresses in general. And those are some of our highest revenue generating ads that we're having right now, whether it's meta or CTV. Got it. So mostly meta, basically for de-influencer content, right? Organic and, right? Yeah. And we're starting now that we've gotten like, we wanted to get our mix right with all of that. We're starting to delve more into YouTube as well and working with YouTube creators. And I think that just from what we've seen initially, I think it's going to be a really good payoff for us.

14:43And, you know, I'm hiring two more people just to start sourcing YouTube creators. I mean, I think it will help, and correct me if I'm wrong, I guess the consideration window or time is high. You know, before you buy a mattress, you kind of look for alternatives and explore that decision very, let's say, carefully and thoroughly before you make it. I don't know if everyone, but that's me at least, right? because you want it by once in a while, within a lot of years. So educational content through YouTube could be great. Is that what you're thinking? For sure. And I think, you know, the written word for Naturepedic is, at least in relation to our brand, is, and I think a lot of things, is the written word is dead in a lot of ways.

15:31Like nobody's reading like long form anything anymore. And when we do podcasts, when we have the opportunity to educate people on our brand and peek behind the curtain. I mean, we could spend the next, you know, half an hour telling you why you shouldn't be sleeping on conventional mattresses. I mean, it's, you know, long and short, it's like a giant soup of chemicals. And, you know, it's people, you know, it's kind of, it just starts to get their wheels turning of, you know, I probably need to get a new mattress. It's been a little while. I maybe, you know, I've got aches, I've got pains, I've got breathing issues, I've got skin issues.

16:05And these things are resonating with me. And, you know, I, again, we're not a medical device, but like the amount of people that come to us and buy our mattress and they tell us afterwards, like, my asthma cleared up, my migraines went away. All of these things, you know, made me feel better once I start sleeping on organic. And it's not a relation to just naturopedic. It's just sleeping on natural and organic materials in general. There's over 100 chemicals in going and making a mattress. So, you know, when you take that type of information and then you apply that to YouTube where people are, I mean, YouTube is still one of the most biggest search tools for people to go learn things.

16:39I think TikTok for a time was as well. I think they're kind of still battling a little bit for each other. It's just a matter of what those search terms are. And I think YouTube tends to be something that probably leads more into our type of customer than TikTok might. Yeah. And now, well, AI, LLMs, JGPT, cloud, et cetera, are kind of taking over as well. The discovery part of the buying journey, right? At least I find myself more often than not going there. Or even if I go to Google, I write longer sentences, right? I think we all do. And it's not only two words for three. It's a full sentence expecting to find the answer and not some links.

17:22So that's changing, of course, across the board. If I had a crystal ball, if they put me in charge of AI, which they probably won't, but if they put me in charge of AI, I think the next big thing would be, and my dude's going to use a ton of tokens to make it happen, but not everyone learns through reading. And I think when you're conducting those prompts of giving people the option of, do you want this all in writing or do you want a very quick, high-level explainer video to go through everything you just asked? and it might be a better way to educate people when they're asking things within these LLMs and that, that, you know, could take the place of something like a, you know, a YouTube or TikTok for that matter because now, you know, it's scouring the entire internet, not just TikTok, not just, you know, the Google atmosphere, it's everything and then you're turning that into a piece of information that people could digest because everyone's different learners.

18:16So, there are things people are doing like some brands I know are doing in different, you know, like different industries, for example, selling HVACs, you know, they, on the website, they have some agents, AI agents, right? And basically there's a lot of friction when buying some complex things or things that people are not so familiar with. So for that, it's like, what's the size or the characteristics, let's say, of that, you know, let's say HVAC, in this case, or air condition that I need to buy depending on the size of my room or many other conditions. So this AI agent answers that question like right on the spot.

18:58And you need to wait for a human, even though we love talking to humans. But these days, if you get the right answer, like not the old chat bot that doesn't solve you a thing. It's like these new AI agents that actually help you with what you want and probably speed to speed up the process because you can actually see this is a product for me based on the needs that i that i rolled in the chat let's say i think uh the older i get i think the grumpier i get i don't know what i'm gonna make an interesting old man and the reason i bring that up is i i love an ai chatbot anymore especially from from uh but like if i have to call into somewhere and i can achieve what i need to do if i have to like cancel a plane ticket or rearrange something or whatever I don't want to make small talk, you know, I'd like just do the thing I need.

19:48So like, they're always like, you know, you call them and, you know, and it's like, I want to, you know, change this. And they're like, how's your day going? I'm like, crappy. That's why I'm calling you. So, you know, I just do the thing so I can move on. Thanks. And without solving problem, they want to upsell you or can also be whatever. So I think that if it's done well in AI chat, as we see in more places as the year goes on, I think it's a positive thing because we reduce the timing. We reduce the, it's better for the customer, I think for some of them or for many of them, I would say, that the quality of the service you can provide them with.

20:30I think this AI agent that I mentioned before is replacing like a quiz, right? Instead of saying, well, see what mattress is the best for you. You're actually chatting, telling the chat your needs, answering some questions and then getting the answer that you want, right? Well, I think it's how, you know, as well as your, it's a good example of having your SEO strategy very sound because the LLMs are picking up all of that on your website. So you got to make sure that everything's built out correctly to make sure that it's picking up all that information or, you know, NFAQ is very nice, But, you know, there are certain things that you also need to have in your PDP pages that just making sure that, like, if it's a sizing question, if it's a color question or whatever, like having that kind of built out within your website, it allows that to get picked up a lot quicker.

21:21Yeah. So even though everything is, you know, moving online right now, or may everything is, yeah, the world I think is online, AI, we need to keep in mind that the radio didn't kill TV, online didn't kill offline, AI, I don't think it will kill humans, I hope not. I still say thank you, please. I do, I'm guilty of that myself. I'm being very polite with those robots who might come from my head one day. So happen tomorrow. So yeah, we should. And I saw recently a post by Gary Vee saying that he's going all in or betting a lot, betting a lot on the offline world. because like he says, like there's a comeback on one hand, teens are buying non-smartphones like the old phones for different reasons.

22:12People value, or so he said, the in-person, you know, relationships like sports events, festivals, concerts, gatherings, retail. So I know you are on the same page on that, right, I guess because you are not growing only online, but you're also opening more retail stores. So I wanted to ask you about that. Why have you decided to do such move in 2026 where many brands are not betting on offline as much as they are betting on the online? Well, I think for the mattress industry in general, it's 53 % more or less of customers want to experience a mattress in store. whether they buy it in-store or online remains to be seen, but the 53%.

22:58And we've seen that where we do show up is, you know, it's like almost a, I don't want to say like an immediate success, but within six months, we're having a very profitable store at that time. And, you know, we're raising that awareness online. We're finally giving them physical presence to come into, for them to interact. And maybe it's that one last little piece that they just need that gentle nudge of like, okay, they really are who they say they are. I feel good about that salesperson in the store and now I'm ready to make that purchase. Because then again, it's not a cheap item. It's not like, you know, you're buying a t-shirt site unseen online because, you know, and it's more cumbersome to return a mattress than it is a t-shirt.

23:39You know, I can go drop off my t-shirt at, you know, UPS and it's done. With a mattress, it's like, I got to schedule a pickup and I got to do this. So, you know, our stuff is designed to make that pretty frictionless, But, you know, the in-store part is definitely a play. And, you know, I think we do see a pretty decent lift in our online stuff thereafter. I mean, we open up a retail store, we see about a 10 to 15 % lift in those markets on our website. Just purely simply of now we're doing, you know, different targeted marketing. We do, you know, it depends on the city, but, you know, we do billboards, we do mailers, We do print stuff with certain publications that, you know, a certain demographic of people are working on or reading.

24:23We do in-store events. We do stuff with influencers that are very specific to that city. Instead of just like being, you know, agnostic, it's more of like, you know, what's hot in L.A. right now? You know, we work with those types of influencers to draw more traffic to our stores. And I mean, you're right. I think, you know, COVID, I had to do a little bit of convincing with the owner or ownership. We only had six stores of our own stores in 2020. And we're going to have 35 by January of next year, just in the last few years. And, you know, a lot of that was convincing them that there is a need.

25:00People do want to have more. I think people were so COVID obviously changes country a lot. But I think COVID really spurned that like, you know, they went so long with being isolated that I think people want to get back to like a slower way of life, the way things used to be a little bit more and not being so isolated. And that's where I think we can give a little bit of sense of community by having a storefront where it matters. For those brands that operate only online for now, but are looking into, you know, opening some stores, what would you say are the, or where for you, you know, the biggest challenges or differences or things that you might have underestimated of opening a retail store, let's say?