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Mike and Jeff start an industry-wide conversation about mattress return policies.
They make the case for why trouble looms on the horizon, and why a change to current practices will ultimately be needed. Part 1 of 2.
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Full Transcription:
[Mike Magnuson]
You make these things outside?
[Jeff Cassidy]
Well yeah, so I like to make stuff in general, when it involves a power tool I have to do it outside. Because it generates sawdust or in this case it will generate PVC pipe dust, so I can’t do it in the loft. I do it on the roof, but power tools and the range are generally not a good idea.
[Mike Magnuson]
That makes sense, cool.
[Jeff Cassidy]
Still with the cardboard boxes for the laptop stand at the moment.
[Mike Magnuson]
Yeah that’s season one, that’s season one in the Mike It Up podcast. Making it happen whatever way we can do it. Let’s get into today’s topic because this is kind of a personal pet peeve or pet topic for both of us I’d say, we both care a lot about the environment but we also care a lot about consumers, and we care a lot about the businesses in this industry and their financial health. This issue kind of ties into all of those, and so it’s become something that we talk about a fair amount and we think about. We’re going to break this into two episodes, in our ever failing effort to keep this content snack sized. But we are going to talk about today kind of the case for change, why we think that there needs to be some change, because it feels like we’re on a path that’s not all together sustainable, as it relates to the volume of returns. We’re going to talk about that today, but before we get into that, I think we want to just set the stage by talking a little bit about how we got here, just very briefly.
Remind everybody that pre-casper in the ‘BC era’, you know one or two years BC we didn’t really have a whole lot of returns in this industry. Return policies often included things like restocking fees and other kind of penalties that basically prevented people from wanting to make a return, there was probably good reason for why those return policies were written that way, because obviously when mattresses get returned, typically they have to go get picked up, obviously if they’re going to be resold, if they can be resold at all I should say, they have to be you know refurbished or treated in some way, and even then they’re going to get marked down significantly. There was a lot baked into hopefully minimizing the amount of returns, and that showed up in the overall number of returns, and some retailers didn’t even accept returns at all. Although that’s probably still true to a degree, there are some retailers that don’t accept returns. But I think that the number of retailers in that category has fallen precipitously, in the last five years I’m guessing.
Then Casper comes in and again in that BC era, not a lot of business being transacted online, and in large part that has to do with the fact that people can’t try the product before they buy it. So one of the things that Casper, one of the sort of business model innovation elements that Casper introduces, is the idea that you can return the mattress at no cost, you could try it for up to 100 days. So they come in there… That’s meant to address this concern with having to buy the mattress without trying it. And it’s a very effective tool, in fact Casper in its early days, finds it so effective that they basically lead with it in their marketing. If you remember Casper’s early marketing from that 2014-2015 time frame, it was like if they had six words to tell you about Casper, two of them are going to be about the return policy or something.
[Jeff Cassidy]
Yeah because the other four were, perfect mattress for everyone.
[Mike Magnuson]
It was like the perfect mattress for everyone, try it for free, or try it free for 100 days. I mean that’s like less than 10 words, half of which are about the return policy. I mean they really led with it, and that’s because it was effective. They found that it was effective, and I think at some point maybe after a year or so, I remember of their evolution, I remember that they reached a point where they kind of found it to be still effective, but they’d started to see the problematic elements of it where the returns, by having led with it so prominently, people were taking advantage of it too often. It was becoming an unsustainable economic, so they were trying to come up with ways to prevent returns once people had it, and that wasn’t working enough, so they started backing off of it in their marketing. They obviously didn’t change the policy, but they just decided to put other things more front and center in the marketing message. Of course, in those early days it was kind of like what Casper did, everyone else followed suit. That was sort of the story, but nonetheless that idea of free returns has persisted. I mean that’s an integral… still remains an integral part of the online mattress shopping kind of expectation that has been set. it’s really the anti, you can’t… I don’t know that today there’s any other model that’s out there in use, in any prominence in the online space.
[Jeff Cassidy]
At this point, it’s just the cost of doing business. Nobody’s going to buy, if you don’t have a policy like that.
[Mike Magnuson]
If anything we continue to see people upping the ante on that, you know moving to 365 day trials instead of 100.
[Jeff Cassidy]
In the beginning it was a hundred and one days.
[Mike Magnuson]
Yeah, that was a hundred and twenty, then it was 180 and then the people went to a 365 and truthfully it doesn’t really matter all that much when you’re offering a mattress. Because at this point these guys oftentimes are not even going to bother and pick it up. They’re not doing anything to recoup that cost, so you might as well let people keep it longer if that’s going to make more people comfortable buying it. As long as you don’t feel like people are serially abusing these things. That does kind of lead into some of the concerns, because what we’ve seen is that there is some abuse, and some of it is flagrant. I was quoted in that Wall Street journal article that I kind of was worried about that article even being written. I remember I had some concerns. Should I really be putting this idea in people’s heads?
[Jeff Cassidy]
Plant the seed for more people to abuse the system.
[Mike Magnuson]
Yeah, the article… the premise of the article was that people are gaming the system such that they’re able to just get a free mattress by just riding this wave of one return trial after another, then just continually serially returning these things, and she hadn’t actually found a lot of cases of it. That was the other thing, I was trying to explain it wasn’t super prevalent at that point.
[Jeff Cassidy]
It was basically one guy in New York, right?
[Mike Magnuson]
Yeah, she had like one guy that she could quote I think, maybe two. Or she had one person who had done it and then one person who thought about doing it I think.
[Jeff Cassidy]
But she was targeting the serial abuser? the lifetime free renter of a mattress, as opposed to what we’re going to talk about today.
[Mike Magnuson]
And that really is… I think, thankfully, has been a rather isolated problem. And even in spite of that article being out there, and perhaps turning people on to that concept, thankfully that remains a pretty isolated problem. By the way, other people who commented in that article were pretty critical of that. Actually the commenters on the article, I think that’s who it was, it wasn’t so much the people who quoted the article, it was the people who commented on the article, were super critical. The person was written almost like the hero of the story, who was this guy who had pulled this off successfully for a couple of years. He was kind of a little bit glamorized in this story, I kind of felt. And people in the comments were not having it, they were like that’s a terrible thing for a human being to do. It’s terrible to the businesses, it’s terrible to the environment, it’s terrible. I mean they were not having it, no one was celebrating this guy.
[Jeff Cassidy]
Which is great.
[Mike Magnuson]
Which is awesome. Humans showing their good sides. But there’s another form of abuse that’s much more common, and it’s people who think they have good intentions and they think they’re using these return policies as they should be used. Clearly that guy knew he wasn’t using the return policies as they were supposed to be used. But people who are trying to decide and pick the right one, they believe that they’re using them as they should, and sometimes they get so carried away they’ll tell us okay, I bought four so that I’m going to try them all and then I’m going to pick the one I want. Like it’s shopping for shoes on zappos and that is just atrocious. And the thing is people don’t necessarily realize, and this is what we explain to them whenever a situation like that comes up on our youtube channel or on our website, I take it as a very clear opportunity to educate anyone reading that is a terrible thing to do. Because I explained that the system right now is saturated, these consumers are led to believe that the mattress that they don’t want, that they return, will be donated. So they almost think of themselves as like oh I’m like a mattress philanthropist. I’m out there like creating new mattresses for people in need here, with my you know shopping here. And that’s just not the case, the system is pretty much saturated, there’s already a lot of friction around who can accept mattresses once they’ve been opened. In some states, no one can. In many states, there’s a lot of regulations around that and even once you get beyond that, there’s just the people who can accept them, they’ve been getting so many over these last few years, they just they’re flush they don’t need more, so that’s the reality of where we are. The system is saturated, people don’t understand that. They don’t understand that the next implication of that, at best a mattress gets recycled. But more likely than that even it’s a landfill situation or something like that so-
[Jeff Cassidy]
I was talking with one of our local discovery partner retailers and he brought up an interesting point, which is that because of Covid, there might be some opportunity they’re seeing, some local organizations and non-profit popping up that are taking mattresses again. So that’s good yeah, there might be opportunities for some of those to come in. But that will just be a temporary blip, I mean the volume of returns is so big that it will quickly outpace whatever new opportunities to help COVID created, it will quickly overflow that.
[Mike Magnuson]
Right and then of course as the online channel continues to gain share, the volume of returns being created continues to go up as well, And by the way, what is the kind of volume of returns we’re talking about? I actually haven’t done the math in terms of like the absolute number, but we have done some math to pencil out percentages of like what are the return rates for these online players, when Casper went public in their S1 there was a lot of data about this that was available for the first time, and I parsed through it and it wasn’t a number that they provide. However, from the data that they do provide,we were able to put some parameters around it, like an upper bound and a lower bound, and come up with a kind of a comfort zone where we felt like the right number probably lives. And we thought that number for Casper was in the 12 to 14 percent range at that time, that was about a year ago when they went public that we made that estimation. I still think that was about the right number for Casper at that time. We’ve heard from people who know these things, or are in a position to know, that some people are as high as 20 percent, or at least for periods of time. I don’t know how sustainable that is, but we’ve certainly heard that from multiple sources that’s kind of an upper bound that’s been out there. And we know for a fact that the people who have, say a five percent return rate. Which by the way, by historical standards going back to that “BC era” that I was talking about before Casper. That would have been off the charts five percent return rates in the 2013 time frame. But today if you’re an online mattress retailer that’s so good that you’re bragging about it in your marketing.
[Jeff Cassidy]
Right, just recently Resident took in a bunch of fundingI think in Forbes, and one of the things they touted was part of getting their effort to get profitable was, they’ve reduced their returns to an industry leading below 10 percent. So that was at the time that we’re recording this right now, I think that was just a week or so ago.
[Mike Magnuson]
Below 10 percent, that means probably high single digits.
[Jeff Cassidy]
Probably, 9.95.
[Mike Magnuson]
Right, well I don’t know if that is really necessarily industry leading, but it’s hard to know because these aren’t public numbers. But certainly we do know that if you’re in the single digits that is bragging territory, we’ve seen that consistently. Anyone who has told us yeah we’re at eight percent, we’re at nine percent, they’re proud of that number. That just tells me where we calculated Casper to be in that sort of low teens. That’s probably about normal for where these online return rates are. So that’s pretty high. Let’s talk about some of the costs of that, first of all, it’s not great for consumers from the standpoint of the hassle of going through a return right, like if that many consumers are having to experience a return as part of their purchase journey, that’s not ideal. Second of all, it’s bad for the environment because we talked about the fact that a lot of these are going to just inevitably end up in landfills. And also it’s obviously bad for the industry, because the frustration and hassle that consumers experience as part of this gets baked into their impression of the experience and of the industry, and obviously the costs have to be borne by the companies. Now those costs are oftentimes passed on passed back to the consumer in the form of higher prices, so that then creates another reason why it’s also bad for consumers. It’s just kind of not good, there’s really no good in this, except for the fact that it does grease the wheels to get people comfortable making the purchase. That part is good.
[Jeff Cassidy]
Or if you’re FedEx.
[Mike Magnuson]
It’s great for FedEx. That’s true, it’s great for them. Although I’m not sure any FedEx driver would say it’s great. I think those guys pretty much hate the mattress industry from what I can tell.
[Jeff Cassidy]
They like cheap foam ones-
[Mike Magnuson]
I will tell you that they particularly hate being on the route that serves me, because we get so many mattresses and in fact there’s even been times where we just get other people’s mattresses, because they see a mattress in their truck and they just assume it’s for me. And they just put it in front of my garage.
[Jeff Cassidy]
I’m sure Rachel really likes that. About as much as your microphone in the office there.
[Mike Magnuson]
She does. There’s so much that she loves about this business, where to even begin.
[Jeff Cassidy]
I’m surprised you’re still married, bless her heart.
[Mike Magnuson]
She’s been a trooper.
[Jeff Cassidy]
Yeah, she hasn’t cut you loose yet so-
[Mike Magnuson]
She’s been a trooper. Yeah, the bottom line is this is not good, but in terms of the case for change, I mean you have to consider that again all of these negatives I just outlined are offset by the fact that there’s a real business rationale for it. Which is that it helps, It created the industry in a sense. There’s no way, I don’t think that if you took free returns out of Casper’s value proposition, that the online mattress and all the other Casper followers… If you took that out of the value proposition, I don’t see how the online mattress industry ever takes hold the way it did. So it obviously was critical and remains critical to a large degree. But at the same time, it’s gotten out of hand. I do think in terms of the case for change, my perspective is that, given the fact that end of life for mattresses is already a problem, like what to do with mattresses that are at the end of their life, that’s already a problem. The mattress recycling council has been working on this, trying to get more recycling programs, trying to help connect consumers with recycling centers. But even that is challenged. There are only three states that mandate it; they’re the ones that have the highest recycling capacity. Other states are going to be much lower capacity to even handle returns and recycling I should say. Getting mattresses to the recycling facilities is a huge friction point, what to do with the materials extruded from the mattresses is a huge friction point. I mean if it’s a spring mattress, the steel component that’s easy. But really everything else, I mean there’s a few other components that are more readily reused, but the foam which is the vast majority of the online mattresses, a lot of them are all foam, that’s probably one of the harder things to know what to do with. There’s only a certain number of uses for that today, so there’s a more systemic problem of creating… How do you create more applications for recycled foam? That’s not something easy to solve per se. That takes lots of companies innovating and doing things. I mean there’s just like a systemic type of change that needs to happen for that. So recycling is not going to get us there, even if we had recycling in every state which even that would take probably decades, given how far we’ve come so far in just getting to only three states with recycling programs. So recycling is not going to get us there entirely in terms of addressing this problem, it helps-
[Jeff Cassidy]
Yeah but there’s also a cost to recycling. You have to build that infrastructure, you have to run whatever plant is going to do it, so it’s wonderful we need recycling, but the concept of ‘oh it’s okay if we have recycling’ doesn’t make any sense.
[Mike Magnuson]
Right, and even if even in a perfect world where you had recycling centers everywhere, there was no friction in getting your mattress to a recycling center, and all of the materials in the mattress could be recycled, even in that perfect scenario, which is so far from where we are now, it’s still better to just not have made the mattress.. then have to recycle it and reuse it.
[Jeff Cassidy]
Clearly we need recycling and I’m a huge fan of recycling, but it’s just not fair to expect recycling to be able to solve the whole problem. And sometimes I think consumers feel that way, like the problem just goes away if I recycle. that’s not the case.
[Mike Magnuson]
And so end of life was already an issue for this reason, and it’s only increasing as an issue as we see mattress lifespan shortening. That’s a huge drive that’s kind of the key driver of that particular issue, like end of life is how long are people keeping these. So if the user keeps a mattress at least 10 years, maybe 12, and now they’re keeping them five to seven. That’s already twice as many mattresses per year ending up in landfills effectively. So if that continues to shorten what we’ve talked about in previous episodes, we talked about the ultra cheap mattress issue, and people being a segment of consumers being trained to think of mattresses as a disposable product. Well that really increases that turnover and therefore the number of mattresses ending up in landfills. But on top of that, there’s a multiplier effect here, which is that if we also are adding a return policy based multiple, every time someone makes a choice, every time someone buys a new mattress and replaces their mattress. Then basically let’s say we had doubled in the past few years because of matt people keeping their mattresses less time, well if now 20 percent of people return their mattress every time they change mattresses, well that turns that adds 20 percent to that already higher number. We’ve already doubled it and now we add 20 percent to the doubled number. That’s a huge compounding issue here that we can really do something about, I think as an industry. I guess where I’m going with this is that the case for change is to me that I don’t see a scenario where at some point people don’t wake up to this. You know with the growing consciousness of global warming, and the glowing measurable visible impact of global warming, and of just environmental consciousness, our collective consciousness as it relates to the environment and our responsibilities, as that continues to grow, I just don’t see a scenario where at some point this doesn’t just become a stain on the mattress industry. Where people just go, what the hell? Why is this happening?
[Jeff Cassidy]
Right, what you hit on so far is the issue of the volume of mattresses that are hitting the end of life. There’s also the aspect of what environmental impact went into making those in the first place? So all of that foam that we’re trying to recycle is also a petroleum-based product. So it’s even worse-
[Mike Magnuson]
Yeah the carbon footprint of these things is not low, and they’ve been transported sometimes across an entire ocean. But certainly in every case they’re transported regionally.
[Jeff Cassidy]
Right, so it’s whatever fossil fuel went into the foam itself, and then whatever the emissions are, and the cheaper the foam tends to correlate with the more pollution from the plant from which that foam was made, from which that mattress came. So it’s just… and as we talked about ultra cheap mattresses and prices going down, and lifetime going down, you’re just creating more and more volume that has multiple ways that it’s bad for the environment.
[Mike Magnuson]
And not to mention that, you know to the extent that mattresses that are using more chemicals in their manufacturing are the ones ending up in landfills, that’s even worse too. Because that’s just leaching more stuff into the environment as they slowly decompose over thousands of years or what have you. That’s the bottom line that we wanted to cover here, is our belief that there needs to be some deep thinking for the industry, and I kind of equate this to the warranty question that the industry wrestled with for many years. I think it kind of ultimately came to some collective change a few years back. I mean it hasn’t necessarily taken hold across the entire industry, but there was some collective change a few years back on the idea of warranties why are we offering 25 year warranties on everything we make, why are we setting consumers expectations that a mattress should last 25 years and then telling them that you should keep your mattress for five to seven years. But there was a question… The reason I equated to that is because inevitably, if you’re going to make a change to this. It’s going to be kind of a game of chicken a little bit. Right like who’s going to who’s going to move first, because otherwise if only one person moves, everyone else could pounce on that and then it becomes sort of a prisoner’s dilemma type of thing where you can’t get anybody to do the right thing, so everyone does the wrong thing and that’s worse that’s the worst case outcome for everyone. But if only one person does the right thing, that’s terrible for them. So warranties were sort of similar in that regard, because they were being used as a marketing tool, and so it was the kind of thing where everyone sort of agreed yeah in a perfect world we would shorten these things a lot, especially on cheaper products that we really don’t build to last you know even more than five years. But who’s going to who’s going to blink first, who’s going to do that? and how can we feel confident that others will fall with suit and commit to it? It required the industry collectively making a decision. And I think that return policy is a tricky type of issue, short of some you know regulation coming in, I think it may require something like that. So we’re going to leave that for our next episode, where we’re going to talk about some ideas we have on that front, but I think the point of this conversation here today was really just to make the case for why we think that discussion should happen, and probably now’s the time to start thinking about that and discussing it.
[Jeff Cassidy]
I don’t know if it makes sense to cover it now or in the next topic, but if you think about it, it makes sense that the consumer hasn’t internalized this problem. That;s because of the same reason we talk about… It doesn’t make sense to do a TV ad because you’re paying for 100 people to see the ad but only one of them’s in the market. So likewise, only one person out of a hundred is kind of thinking about a mattress at any time, so it’s not a product that we’re making transactions with every day. I’m not thinking about recycling it, because I’m not consuming it in my mind all the time. It’s just every eight years or whatever. Versus if it’s the Soda or Beer cans, you have them all the time, so it’s a constant reminder every day, ‘oh I should recycle this, oh I should recycle this’. But a mattress is not like that, so the majority of the population isn’t thinking about it at any given time, it kind of makes sense. I think that’s more reason that it’s incumbent on us to try to do something here.
[Mike Magnuson]
You highlight the challenge of using the media here, because the media I do think needs to be part of telling this story to consumers. I think from the standpoint of averting the potential stain on the industry that I talked about, I think someone from the media focusing on this is likely to be a catalyst for that. But likewise from the standpoint of creating this collective movement and coordinated change. I think using the media as a tool to educate consumers as that’s happening will be an important part of the strategy, but in both cases your point about the fact that this is not something the average consumer is thinking about on a daily basis, does a little bit highlight the challenge there because how do you make this story seem pertinent to people who are not focused on this product right now.
But nonetheless, there’s certainly things that the industry can do because getting people to think about this at the point they are making their purchase is important. That’s something from the standpoint of Goodbed, we definitely think that we can help with this issue, and one of the ways is of course by calling out bad behavior when we see it, as I talked about earlier but also just discouraging bad behavior. Actually, I had intended to touch on this earlier but when we talked about abuse, knowing abuse like trying to do is be a serial returner that’s one thing, and the next level down from that is abuse that has more good intent, but you’re buying several with the intention of keeping one, that’s still abuse. But there’s even a more subtle form of abuse, that’s much much more pervasive, and that is the person who just sort of blows off their research process because they’re going to lean on the fact that they can always return if they don’t like it. They just say ‘ah, my friend has this one, they said it’s good, to hell with it, I don’t feel like researching. I’m just going to go buy this, if I don’t like it, I can always return it’. That’s also abuse and that type of abuse is super prevalent. That’s the type of thing that we really feel our entire business model is designed to help solve and help improve, because obviously our whole business is about helping people choose the right mattress for them the first time. So everything about what we do supports that.
[Jeff Cassidy]
On the surface it could look, to a seller of that mattress, oh it’s actually good what you just described. Because this person wasn’t going to buy otherwise, but now because we made it easy they bought. The reality is you have to look at what’s the expected lifetime value of that person, and those are the people who are way more likely to return. So they’re way more expensive so to speak, if you look at that group in aggregate. So it’s in the brand’s best interest to also make sure that they’re selling to as many people for whom the bed is going.
[Mike Magnuson]
Right, because obviously their overall economics are the summation of all of their customers, but on any given customer, if a customer goes and buys a mattress from them and then returns it and then goes and buys a mattress from somebody else, they lost money. They clearly lost a significant amount of money on that customer. Not only did they pay money to acquire that customer, they also paid money to ship that customer a mattress that they didn’t recoup at all.
[Jeff Cassidy]
And they made the mattress, they paid for the mattress.
[Mike Magnuson]
Yeah, they didn’t just pay to ship it to them, they paid to make it obviously. They actually lost a lot of money on that customer and so getting more of those types of customers is an unprofitable proposition for sure. So again I think the point I was trying to make in response to what you had said earlier, was just that we as Goodbed I think we have a lot of things that we try to do to help here, but we also feel like maybe there’s a way we can play a little bit of a thought leadership role and be kind of a Sweden. Hey, wearing my Sweden flag shirt here, as a proud Swedish American. But if we can be kind of Sweden here, we might be able to help the industry collectively move towards something that is a more sustainable solution, so that’s kind of a tease to the next episode.
[Jeff Cassidy]
Cool well, why don’t we wrap it there. I’m also chomping at the bit to hear what happened with your investment that you got blocked out of by Kleiner Perkins and Sequoia?
[Mike Magnuson]
Yeah, so where we left that story off, if you haven’t listened to the previous episodes you should go back and hear about my journey in podcasting which began in 2003-2004 before the term podcasting had even been coined. It led me to ultimately be kind of in the mix with all the early frontiersmen and women of the podcasting space, the pioneers if you will, back in the 04 05 time frame. Ultimately, had a term sheet to fund a business of what was at the time the most prominent group in the podcasting space. Which was led by Adam Curry who was a former MTV DJ. So we had been working with him and his business partner, signed a term sheet only to discover, on a spring break that I took with my kids the following week, that he then promptly flew to San Francisco, met with Kleiner Perkins and Sequoia, received a term sheet from them, all while I’m on spring break. That was better terms than I had offered him, and that he had signed up for. Come back and all this happens, while I’m not in a position to really do anything about it. So by the time I got back, my partners had decided okay well there’s not really all that much we can do here. So we ultimately kind of just walked away gracefully from that situation. Obviously I followed the company.
And I guess for those who were interested in how that played out? They didn’t do well. They stuck around for a few years but they went down the wrong path in my opinion, they went down the path of trying to just create a bunch of content. And it was too early for that at the time, I didn’t believe that was the right approach, that’s not the approach that we had signed up to fund, and this maybe was part of why ultimately he went with them as well. I believed that in the early days you needed to be building tools. It’s kind of, like in the gold rush analogy. In the early days, you got to be selling Levi’s jeans and the Pickaxes, you’re not selling the ultimate product here the content. There wasn’t enough of an ecosystem for monetizing that content yet, to be out investing money in creating content, you needed that content to just be made on the cheap by kind of more organically and so forth, and then you’d be the Pickaxe kind of arms dealer that’s creating the tools for them to support that work, and then ultimately monetize that work. So the ad network and everything like that, that’s what I was hoping to back. That’s not what they ended up doing, they went down the wrong path. I don’t think they had the media mindset that you needed to have the right strategy there, but you know that was sort of cold comfort because I really wanted to be part of it and I really wanted to help them grow. And then the other closer that story by the way, is that maybe a year or two after that all went down, I bumped into Adam at a conference. He’s super tall, he’s like I want to say.. like 64 65 so he easy to spot from across a room and he had a crowd of people around him, he’s signing autographs and stuff like that, and I just walked up and he saw me like coming even, and I just walked up to the crowd, and he just stopped what he was doing and he goes, ‘hey you know that was just business, right?’. And I just walked away. So that’s how that story ended. That was the last time I saw Adam Curry.
[Jeff Cassidy]
Maybe he’s listening now, he’s probably a big fan of mattress podcasts. But if that deal had gone through, and you would have been heavily involved in the company, or as involved as you guys and your firm would get, do you think you would have started Goodbed?
[Mike Magnuson]
That’s really hard to say, I mean the genesis of me starting Goodbed did come out of a similar, as you kind of teased at one point earlier in this season… Did come out of a similar proactive investment thesis that I had. It was something that I was kind of pursuing proactive alongside of my interest in what ultimately became podcasting, but I was looking at companies that were doing much like what we do in various product categories. And along the way, I bought a mattress and discovered that was a category that desperately needed something like. That quintessentially bad shopping experience. So It’s hard to say, because I was not intending to join up with them, I was still intending to remain an investor.
[Jeff Cassidy]
No but you were emotionally invested. I mean it had been your idea, your thesis, you pursued it. It was-
[Mike Magnuson]
That wasn’t the only investment we did that was like that though, I mean there were other investments we did that I spearheaded and was emotionally invested in. Yeah, they didn’t become something I leapt into full-time. It’s possible this one would have been more alluring in that way than others, but those certainly didn’t stop me from doing Goodbed. It was ultimately the fact that no one was doing this that led me to jump into this, it was the void.
[Jeff Cassidy]
Well, we’ll get to that more later. I was just curious if the rest of the mattress industry, if we actually should say thanks Adam Curry, because you doing that ultimately gave the mattress industry-
[Mike Magnuson]
Well, I don’t think that anyone out there is writing thank you notes to Adam Curry for that. But if there is anything to be thanked for, it’s again the fact that no one was doing it. Because if someone had been doing it, my mindset would have been to back them as an investor. It was the fact that no one was doing it that made me feel compelled to actually start it myself. That was my intention from the beginning, I’m going to look for somebody who I can invest in to do this in the mattress category, for that matter in lots of other categories that I had identified. But again there wasn’t anyone, so that’s what we have to thank for this, and certainly my wife is super grateful for that. She’s writing Adam Curry all kinds of thank you letters/hate mail.
[Jeff Cassidy]
Rachel, she really is a trooper. I give her credit.
[Mike Magnuson]
Anyway we’ll leave that story, that’s really kind of the closure on that tale. But just to come full circle, it is super fun for me to… I mean I was a member of the New York city podcasting association starting in I think 05. And you know, there were like seven of us. It was a meet-up and there were like seven of us. It was just like we met in someone’s office, and it was like nothing. If I went out to dinner after one of those, I’d say yeah I just came from this New York city podcasting meetup, they were like what? What did you… what? No one had any idea what podcasting was, and by the way it took a long time for podcasting, that’s the other thing if I would look back on that experience, it took a hell of a long time for podcasting to come into its own, much longer than I expected.
I thought for sure when the iPhone came out, I was like ‘oh man like now it’s really going to explode’ and even then it took another probably eight-nine years before it really had serious traction. And another like at least 10, if not 11 years, before there were serious exits being seen, you know in terms of acquisitions, It was a long time coming. I was ahead of the curve, as I was with Goodbed. As history has clearly witnessed, and again as my wife can clearly attest to, so continue to reference that. But nonetheless, in both cases I think the initial vision has proven to be on point, and the need has been there in both cases. So that’s one of the reasons that I remain so convicted about what we do, because I know there is a desperate need for this and so it’s just a matter of you know continuing to help people, help get the word out about what we’re doing, and help people understand what our intentions are, what our motivations are. That we are here to help good companies succeed in this industry, and we really believe we can do that alongside helping consumers make the best choice. And we’ve thought a lot about how to strike that balance and where we know how to do it. I remain as convicted as ever in that mission. Is that the right use of the term convicted, I remain convicted?
[Jeff Cassidy]
Well these days convicted has a different connotation, hopefully you’re not going to be convicted about anything. But we know what you mean, you have a lot of conviction and belief and enthusiasm about what we’re doing, rightfully so. All right, let’s wrap up.
[Mike Magnuson]
Alright, there we go. I hope you enjoyed this ‘all you can eat” buffet. We’ll be back with our solutions to the return problem next week. If you like what you’re hearing, remember to subscribe on whatever podcast platform you use. And leave us a review, it helps other people discover the podcast. In the meantime, we’re out.
