Acquisitions Anonymous - #1 for business buying, selling and operating Best of Acquisitions Anonymous - This Mattress Company Has Explosive Growth
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Dec 26, 2025 Dive into the intriguing world of a rapidly growing mattress company, which skyrocketed its revenue to $43M but faced plummeting margins. Discover how customer acquisition challenges and intense competition in the DTC space threaten its future. The hosts critically analyze product differentiation and the impact of big players like Amazon on profitability. They also explore whether seeking an equity partner is a wise choice amidst these challenges, debating if contrarian investment opportunities might emerge despite prevailing market headwinds.
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Growth With Shrinking Margins
- The mattress manufacturer tripled revenue in three years while EBITDA fell from $5M to $3.7M.
- Rapid top-line growth can coincide with declining profitability when customer acquisition costs rise and margins compress.
SKU Breadth Isn’t Defensibility
- The company sells 50+ SKUs and 1,000+ accessories and relies heavily on Amazon and Shopify.
- High SKU counts and accessory breadth don't guarantee defensibility in a commoditized DTC market.
SKU Fragmentation Prevents Price Shopping
- Mattress SKUs are often tiny variations, making price comparison nearly impossible.
- That SKU obfuscation historically allowed retailers to charge monopoly-like prices.