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How to Bootstrap Your Way to $250,000,000/year with JT Marino of Tuft & Needle

Episode #061

JT Marino (@johnmarino) made the unusual journey from software engineer to mattress tycoon, and he did it without raising a dime from investors. In this episode, JT provides mountains of actionable advice about how to bootstrap a business through every stage, from pre-launch product validation up through hundreds of millions in revenue. Learn how Tuft & Needle convinced their first customers to buy mattresses from a brand they'd never heard of, hired top performers on a limited budget, navigated a risky relationship with Amazon, competed with the venture-funded clones they inspired, and much, much more.

  1. 7

    WOW!!!!

  2. 4

    One of the best episodes yet, Courtland. It's great to have had such variety on the podcast recently, and you're really coming into your own as a broadcaster/host.

    Keep up the great work!

  3. 4

    This is a really interesting interview, and $250m in revenue seems a big number for a bootstrapped company.

    It's patently obvious that there has been a ton of hard work invested and cleverly applied business acumen to get to this point.

    It's also refreshing to see a software engineer solving a problem outside the software field, even if this is indie hackers!

    One thing I'm curious about is negative reviews. I had a quick look on amazon and there are nearly a thousand negative reviews, and many of them say how the mattress was great to begin with, but deteriorated over time. Although there are over 5600 positive reviews, one person pointed out that most of them are in the "honeymoon period".

    Is it possible that there is a problem looming? If so, it's a really interesting problem because it wouldn't have been detected in the earlier stages. How could it be addressed?

    1. 3

      We see a tight correlation between our return rate/NPS (cust sat)/review quality/customer contact rates. Lately, and it comes in waves, we'll see surges of negative reviews from accounts that use very similar language/keywords (markov chains?), new accounts, etc where we believe there is gaming going on. These, a lot of times are incongruent with our other numbers. This industry plays very dirty. It's tough.

      We've seen gaming happening essentially since we joined amazon and hope Amazon improves their algos.

      Our message to the team is to be confident and stay focused on service/quality control and priorities.

      1. 1

        It crossed my mind that some foul play might be going on. The fact that you say it happens in waves (and assuming no correlation with sales volume) is particularly suspect.

        Does amazon offer any help through weighting reviewers with verified purchases?

        From your interview I particularly enjoyed hearing about the concerns you have over dependency on Amazon's platform and the commitment you have to your direct channel.

        Thanks for replying, you guys definitely have your heads screwed on!

        1. 2

          I really dig the team, mission and product. I genuinely hope they win big and grow into something amazing.

          That said, notice how the reply wasn't really an answer to your question...

          1. 6

            Transparency is a core value. I’m happy to be specific.

            To answer the question, no problem looming from our data. Warranty claims have not grown over our 6 year lifespan and are steady and low. Sub .5%

            Very rarely do we NOT honor a warranty with a replacement, even if we believe its just to get another product. The warranty is one you can use and guaranteed 10 years, despite our ASTM + additional fatigue tests showing a degredation of firmness less than 5% indentation force deflection over a 20 year period. Typical memory foam is around 35% degredation over 10 years.

            I’d rather trust the customer and send a replacement than nit pick over a specific proof of evidence (as incumbants do). Trust, loyalty.. we care a lot about those values.

            We favor strong stable growth looking toward long term. Daehee and I started this company to disrupt the industry in its entirety. Customer trust is integral to that.

            1. 1

              Good answer.

          2. 1

            When you run $XXX million company you need to watch what you say. Few words or one promise to many, and you might get into legal trouble.

  4. 2

    Terrific interview and great to see tech guys solving real world problems.

  5. 2

    It really sounds like JT read Traction by the Duckduckgo founder and did the bullseye framework.

  6. 2

    There's a fascinating article on this industry on https://www.fastcompany.com/3065928/sleepopolis-casper-bloggers-lawsuits-underside-of-the-mattress-wars which talks more about some of the nastier tactics and competition. I found it after being intrigued by some comments on This Week in Startups.

    1. 1

      This is crazy. For websites that honestly look terrible, they are driving so much traffic. Makes me question any online review I read. Full disclosure should be made at the bottom of any article that receives compensation.

  7. 2

    Very inspirational @jtmarino, you have found an old, rusty niche and you conquered it with innovation.
    I am yet to check the interview - I will leave it for some quiet time, so I can really digest it.
    Thank you for comming to IH, people like you help whole communities to strive and believe in success.

    1. 3

      Thank you!

  8. 2

    Can't wait to listen to this. I have a T&N mattress!

  9. 1

    My Main Takeaways:

    • JT and his co-founder bootstrapped their company to $100,000,000 annual revenue in 5 years.

    • JT met his co-founder at college, they realised that they both got along. A few years after graduating, they both worked for the same startup in Silicon Valley, here they decided that they wanted to leave and start something of their own.

    • After graduating college they both worked in various different startups separately, until they eventually ended up at the same startup. This gave them a lot of valuable experience that they would soon take into their own startup.

    • They got their idea for their mattress startup “Tuft & Needle” from their own pains.

    • They used a (sort-of) Design Thinking to Empathise with the pains of buying a mattress, they Defined solutions to these pains, they then Prototyped a quick product page page with a Stripe payment form, they then Tested it by using Google Adwords to see if anyone would buy - and within a few minutes someone attempted to buy! (It was a prototype to validate the idea, no product existed, so no payment was taken)

    • After they validated their idea, they quit their jobs and started working on their startup full time. They both funded this with a few thousand dollars of their savings. It took them 4 months to get ramen-profitability.

    • For the first two years, they only paid themselves the minimum required to survive, and invested everything else back into growing the company. (They only increased their own pay when they knew it would have no impact on the growth and trajectory of the company).

    • After launching, JT moved into his co-founder’s apartment and slept on the floor.

    • JT never had a mentor. All he did was read everything on business. He has read a lot.

    • JT doesn’t believe that entrepreneurs are big risk takers, he believes that they are calculated risk takers. They didn’t raise capital for the idea and try scale it over months. They played it simple, and made a cheap prototype and validated it in a week, then bootstrapped it.

    • JT was inspired by Steve Jobs and Bill Gates, and wanted to make his own startup.

    • Courtland spent a few years as a contract Web Developer for a lot of tech startups.

    • JT got burnt out and bored of tech startup culture after working in so many tech startups, they all seemed the same.

    • Initially mattress suppliers would not answer JT’s phone calls because they did not know who he was, so he drove all the way to their offices and spoke to them in person.

    • There are no Silver Bullets, it’s really just the Sum of All Things. Just take enough action and you will find that all those actions played a part in achieving your desired result, albeit at varying degrees.

    • He got his first few customers from Google Adwords, Friends & Family, and Reddit posts. And one of the readers of his reddit post was a journalist from Forbes who wrote an article on their startup and got them a lot of press coverage which resulted in a lot of business.

    • They got a lot of things wrong at the start, but they learned from feedback and improved over time.

    • Be genuine, let your customers know that you are small, and ask them to help out by simply letting someone else know about your startup (like JT did).

    • You can create credibility by (1) Having a big Brand, (2) Having press coverage, (3) Having great reviews

    • In their company, they treat everything like a product, everything has a feedback loop (Inspired by their tech-company experience)

    • When looking to get into retail he had great advisors who told him that he’d have to try setting up physical 3-5 stores to get a good feel fo whether having a retail store would work for their business.

    • When bootstrapping, focus on what’s working until it no longer works. Then move onto the next thing that’s more effective. (The S Curve)

    • Tuft & Needle (the company) is customer-centric, not competitor-centric

    • One mistake they made: They spent half a million dollars on a video commercial which they put on the TV, but it did not get much traction.

    • How they learned from their mistake (above): They saw that their TV Video commercial looked the same as every other commercial, so they decided to do a much simpler, cheaper one that was much more polarising, and used billboards instead. This got much more traction.

    • You have to capture attention and stand out from others in advertisements

    • Being bootstrapped forces you to only focus on what matters most, which is sales and customer satisfaction.

    • Being funded encourages you to focus on growth, hiring, and raising brand awareness.

    • JT and his co-founder had the competencies to do most of the things that needed to be done in the startup, so they didn’t need to hire for a while.

    • Hiring was very hard because no one wanted to work at a mattress company.

    • To get their first developer, JT had to have a coffee with a developer and really sell the vision of the company, going as far as to show the code of the website to the developer to entice them. (They had to go through this process to get their first few employees for different positions). Now (at the time of this interview), they get 1,000s of developer applications every day.

    • Advice for starting founders: Ask yourself if the problem that you're trying to solve is important. Break the problem down into parts that you can solve. Identify the part that you could most quickly solve and get feedback on. Test/Validate it.

    • Book recommendation: The Halo Effect by Phil Rosenzweig

  10. 1

    Really good.

  11. 1

    Bootstrapped to merger with the industry leader... BOOM!
    https://www.tuftandneedle.com/six-years-of-tn

    1. 1

      Would be fun to hear details of the merger. Financial ones too, but those were not disclosed to the public.

  12. 1

    One of my favourite episodes! However, didn't really hear the book recommendation, The Halo Effect something? Could someone please share a link? Thanks!

  13. 1

    What were some of your favorite books that you read?