Funny Story: Building Sheets & Giggles into a DTC Success Story

They say that laughter is the best medicine. For Colin McIntosh, it’s also been a pretty good business strategy. After a couple of fits and starts in business, Colin found himself with no job but quite a few domain names in his possession, all of which were pun-based. So he cycled through what he owned and formed a plan to build a company in a disruptable industry where he could make a splash and earn some market share. 

What he landed on was Sheets & Giggles, a direct to consumer bedsheets company with a social good component that became the most successful bedsheets company to launch on the crowd-funding site, Indiegogo. Since then, Sheets & Giggles has grown to millions of dollars in sales. 

On this episode of Up Next in Commerce, Colin gives the behind-the-scenes story of building Sheets & Giggles, including how he worked backward to build an email list that led to an unprecedented 45% conversion rate. Plus, Colin dives into the pros and cons of selling on Amazon, and gives an exclusive preview of some of the ad copy he’s working on to bring more humor to the Sheets & Giggles campaigns across channels.   

Main Takeaways:

• Going Backward: In order to meet your goals, it’s sometimes useful to work backward. Define what it is that you want to achieve and then reverse engineer the steps you need to take to get there. 
• Navigating the Amazon Waters: DTC founders agree that Amazon is simultaneously the best and worst partner you can have. There are pros and cons to working on the platform, including massive discoverability but also deep cuts into profit margin. It’s important to weigh all the pros and cons of selling on the platform and find the strategy that works best for your brand and that leaves you with more of the pros than the cons. 
• Laughing With You, Not At You: Selling with humor is an effective strategy if you can actually get potential customers to engage. Consumers are reading less and less, so if you are going to use humorous copy, it needs to really resonate, grab the attention of the customer, and get them to keep going along the customer journey. It’s easy to be funny just for the sake of being funny, but you have to remember that the ultimate goal is to sell the product, so there needs to be a call to action.

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

---

Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce

---

Transcript:

Stephanie:

Hey everyone, this is Stephanie Postles, Co-Founder of mission.org, and your host of Up Next In Commerce. Welcome back. Our guest today is Colin McIntosh, the Founder and CEO of Sheets & Giggles. Colin, how's it going?

Colin:

Pretty good. Thanks so much for having me today.

Stephanie:

Yeah, thanks for coming on. I was very nervous about messing that name up. I'm sure you get that a lot.

Colin:

MacIntosh, McIntosh. Yeah, [crosstalk 00:00:28]-

Stephanie:

Oh, I meant your company name.

Colin:

Oh, Sheets & Giggles. Yeah. No, of course. Yeah, sorry. I feel like I've gotten so used to it now, I don't even register it anymore. But yeah, you can call it S&G for short, so that way you're not laughing every time.

Stephanie:

There you go. I like it. So, before the show started, we were going a little bit through your background, which I think people would like to hear before we get into Sheets & Giggles. So, I'd love for you to kind of start there. How did you come to founding Sheets & Giggles, and what came before that?

Colin:

Well, a lot came before. It depends on how far back you want to go. I graduated from Emory University's business school back in 2012, and I started my career at the world's largest hedge fund in Connecticut, a place called Bridgewater Associates. And, the founder there, a guy named Ray Dalio, is pretty famous nowadays. And, I got fired in about five months, which was great being 22 and losing your first job in a strange state that you don't know anybody in. And then-

Stephanie:

What happened?

Colin:

Well, I was terrible at my job. So, [crosstalk 00:01:33]-

Stephanie:

Five months is not enough time. How did they even know?

Colin:

No, Bridgewater is usually... They're famous for two months or two years.

Stephanie:

Okay.

Colin:

And so, I kind of had a weird little in between stay, where after two months we were all pretty sure it wasn't going to work out, but they were like, "Ah, this should work out," and they didn't want to really pull the plug. And then, eventually I remember, they were arguing in front of me one day about... I'll never forget this. They were re-interviewing me for a different role inside of the company, and... That's how they do it. You lose your "box," and then they try to find you a new box before they totally get rid of you, because they think you're a culture fit.

Stephanie:

Yep.

Colin:

And so, they were arguing in front of me. I'll never forget, these two guys, the two managers. One said, "You know, I think Colin is a six for this role," and the other manager says, "Well, I think he's more like a seven, and I think we should hire him into it." And, they're arguing six, seven, six, seven out of 10. And then, the arbiter goes, "Look, guys. He can't get hired into the role if he's not a seven. If he's a six, we can't give him the offer." And then they agree, "Okay, he's a six-and-a-half, and we'll need to have another meeting on it." And, I just remember I raised my hand and I go, "Guys, let me do this. Today's going to be my last day at Bridgewater." I just couldn't deal with that type of [crosstalk 00:02:50]-

Stephanie:

Yeah, rating you.

Colin:

It was crazy. Yeah. And so, that was my first job experience. And, from there I became a recruiter, a third-party agency, recruiting for banks, and hedge funds, and startups. That's where I got into technology, and startups, and software. Taught myself a lot about software development and software engineering, and ended up hiring a bunch of different engineers at a bunch of different companies. And, I ended up hiring myself at one of my clients in Seattle, in a really interesting B2B software space called Application Virtualization, which was really hot in 2014; it's still pretty hot.

Colin:

And I ended up moving up to Seattle. And then, about a year and a half later, I got an opportunity at a company that I helped co-found with some friends called Revel R, which was a wearable tech product that got into Techstars, which is for those listening, a really famous worldwide accelerator for startups. They give you a $100,000 for 6% of your company, and put you in a room with nine other companies for three months, and give you all the training, resources, connections, and mentorship that you could possibly need.

Colin:

And so I dropped everything I was doing in Seattle, drove 19 hours down to Denver on a week's notice, and became a Coloradan about five years ago. And, that company... I ended up working there for about two-and-a-half years. We all got laid off at 1:00 PM on a Sunday, as startups unfortunately go. And, it was really sad. We had raised millions of dollars, and we're in Target, and Brookstone, and HSN, QVC Deals, T-Mobile stores. But, that product, unfortunately, didn't have all the legs that we thought it did. And, three weeks after I got laid off xI incorporated Sheets & Giggles, and now it's been three years since that date. And, it is now the longest I'd ever worked anywhere in my career.

Stephanie:

That's great. So, what is Sheets & Giggles, and how did you have the idea to start it?

Colin:

Well, for anyone who hasn't heard of us, it's okay; although, I will hold it against you.

Stephanie:

Very rude.

Colin:

Very rude. We sell bedsheets that are sustainable, and they're made out of a material called Lyocell, which is made from eucalyptus trees. And so, if you Google or Amazon eucalyptus sheets, we're generally the first results. Lyocell sheets is another query we rank high for. And what our sheets do is, they actually save up to 96% of the water that cotton sheets use, which is about 96%... sorry, 1,000 gallon reduction. And then, they also save in energy, they use no pesticides, no insecticides; whereas, cotton can use 16-24% of the world's insecticides just by itself, as a crop.

Colin:

They also biodegrade faster than cotton, they're hypoallergenic, they're zero-static, and they're naturally softer and more cooling. So, if you're a hot sleeper, they're the best possible material. The eucalyptus Lyocell is for hot sleepers. And so, it's a really wonderful product. We began manufacturing at about two a half years ago, and we now have shipped tens of thousands of orders. We raised a couple of million dollars in capital, although we are mostly revenue funded, and we grow according to our revenue. And, we are just loving life right now. We're a very socially conscious company, and it's really wonderful to be able to have fun, do good, and make money at the same time.

Stephanie:

That's great. So, with your company, did you see an opportunity in the market from doing research, or did you just wake up one night sweaty like "Oh, I need to build better sheets. This is [crosstalk 00:06:32]." How did that happen?

Colin:

So, whenever I hear founder interviews from Brooklinen, or other bedsheets companies... And, I hate to throw Brooklinen under the bus. They're a great company, and I really respect... No, I really respect what they've built. They get $100 million dollars in trailing 12 months revenue. They're a wonderful company. But, their co-founders go on these-

Stephanie:

However.

Colin:

... podcasts, then they're like, "Oh, we were staying in these hotel sheets, and we were like, 'Oh, they're so lovely. And, let me find out how expensive they were,' and we were like, 'There had to be a better way.'"Nobody starts a company because they stayed at a hotel. They saw a really good business model. They found a manufacturer who would make really good products for them at an affordable price so they could resell it a higher price, and they went from there. And that's great, and they should be proud of that.

Colin:

And so, that's sort of, more or less, what happened with S&G, where it was actually a business model play first. And, I'm a big... a big, big advocate of sustainability, and climate change is one of my hot buttons. I've always had a bleeding heart. I've worked at startups trying to end animal euthanasia. My last startup, the wearable tech startup I talked about, we were trying to fight sexual assault and violence. We actually sent out 60,000 emergency alerts, saved a bunch of lives, which was really a wonderful... wonderful thing that the company did. But you know, this company, I really wanted to have a sustainability mission. And so, I kind of sat down and I wrote out my perfect business model with a sustainability mission.

Colin:

This is a true story. I looked at all the domains that I owned, and I owned SheetsGiggles.com because I thought it'd be a funny name for bedsheets company. I have a lot of pun-based domains that I own.

Stephanie:

What's some other ones? I want to hear them. Any others come to mind?

Colin:

I've got a few really good ones, Bodcasts.com...

Stephanie:

Oh my god.

Colin:

... B-O D-C-A-S-T-S.com. I love that. I would love to do podcasts for exercise, where you don't have to watch YouTube videos, and you can just have a platform for exercise physiologists and personal trainers to do listening-only routines. I also own SunglassesHalfFull.com for a sunglass company, GiraffeCarafe.com for carafes in the shape of giraffes. I own WorkFromRome.com. Why work from home when you can work from Rome? That's a travel company for remote work. I buy a lot of domains [crosstalk 00:09:13]-

Stephanie:

So many companies to start, so little time.

Colin:

Yeah. Romanhemperor is probably my favorite one that I'll probably start one day, a CBD company.

Stephanie:

That's good.

Colin:

My nephew's name is Roman, so he'll be my little CBD mascot.

Stephanie:

Perfect. I like it.

Colin:

Yeah, I'm sure my sister will love that.

Stephanie:

Yeah, I think she will.

Colin:

Yeah. But yeah. To answer your question, a lot of them. I owned SheetsGiggles.com. I thought, "Does bedding fit my criteria?" and it fit perfectly, $12 billion U.S. market growing 10% year over year, highly fragmented, the top five players only own about 27% of the market, and it wasn't fully online at that point. It was still mostly physical retail. I kind of just put my head down, and I fell in love with this brand. That was the other thing, is I just fell involved with the idea of a funny brand in a very boring space, especially if it's a sustainable, premium product and you can still do a funny brand. That's a really hard tight rope to walk, and I really fell in love with the branding challenge.

Colin:

That was kind of when I put my head down in October 2017. I created a brand, Identity Map, for this pun-based bedding empire, is what I would call it to people. Me and a couple of contractors just designed a logo, and I built my own website, wrote every single word of copy myself, would stay up until four in the morning, writing, wake up at 8:00 AM, start writing again, and just totally fell in love with this weird, little company that I was creating in my bed, in my underwear. In May 2018, we did our crowdfunding campaign on Indiegogo, raised $284,000 crowdfunded, love those crowdfunders and have a very special relationship with thousands of people who brought the company to life, and it's all been history of since there.

Stephanie:

That's really fun. What was your experience on Indiegogo? How did you get found? Because a lot of times on those crowdfunding platforms, it seems like there's so much noise nowadays. In the early days, it was [crosstalk] to get found.

Colin:

Yeah.

Stephanie:

Now it's like, "Oh my gosh, if I put something up there, there's thousands of other people trying to raise money for something." How did you make sure that people found your potential product?

Colin:

Yeah, absolutely. Even in 2018, it was still a pretty difficult task. There were still thousands of projects being launched every single day. 2013, 2014 would have done prime time to do a crowdfunding campaign. That was actually when, fun fact, I'm going to brag a little bit, Brooklyn did their Kickstarter in 2013 or 2014, and they did $236,000. We did ours in 2018, $284,000.

Stephanie:

Hey.

Colin:

Yes.

Stephanie:

Hello.

Colin:

Basically, there's a few hacks for crowdfunding campaigns. If anyone out there is thinking about doing a crowdfunding campaign, generally speaking, you want to do a few things. First and foremost, you want to set a goal that you can hit on day one because their algorithms reward percentage of goals hit in a period of time. They don't reward dollars raised. You don't want to go too low because then you've set expectations for people that, "Wow, you've blown away your goal, and now I expect the world from this company," but you don't want to go too high either and have a goal that takes you the full 30 days to hit because then you won't trend. For us, for example, internally, we wanted to do $100,000. Externally, we set our goal as $50,000. We thought that we could hit that in a couple of days based on our preparation.

Colin:

The second thing you want to do in order to come out of the noise is prepare. A lot of people... It's kind of sad. I see them launch a crowdfunding idea for something that maybe is a really cool idea or a cool project, but they don't do any preparation whatsoever, and they don't stop the think that even if they have 1,000 Facebook friends and 30 friends and family and 500 connections on LinkedIn and whatever it is, you just got to always assume a 3% conversion rate with anything, even your friends and family. If you have 1,000 people that you think you can count on, you're talking about 30 people that are actually going to pull the trigger and give you their credit card information when you end up buying. You don't want to rely on the friends-and-family model for crowdfunding. It's just not a good way to do it.

Colin:

What you want to rely on is an email list. I get asked all the time, "Where do you find your email list? Do you buy it? Do you build it?" The answer is, "You build it." You want to build it and get people to give you their emails who are interested, qualified leads, who are interested in buying into the brand that you're building. What we did was we worked backwards from our goal of $100,000 and said, "Okay, $100,000 in 30 days, generally speaking with the crowdfunding math, you want to make 30% of that on day one." That's just the way the crowdfunding works, big boost in the beginning, plateau in the middle, boost at the end. You want $30,000 on day one. We knew our sheets were going to cost $70 on average, which was a really low price. I really under-priced them. We knew our average order was probably going to be 1.5 units, so $100 average order value. If $30,000 on day one at $100 average order value is the goal, that means we need 300 customers on day one.

Colin:

If an email list converts at 3%, then that means that we need 10,000 emails in order to get 300 customers on day one. That became our singular focus, singular goal from February through April of 2018 was gathering those 10,000 emails, doing it at an affordable price that would end up translating into a low cost of acquisition, and we ended up spending about $9,000 to gather about 11,000 emails, converted at about a 45% rate, which was really unheard of. That was the first time I was ever very, very-

Stephanie:

That's really high.

Colin:

Yeah, I was very, very excited and confident that the crowdfunding campaign was going to go well when we saw the 45% email capture rate. We ended up converting at 4.5% on our email list on day one, and we had a $45,000 day one just like clockwork. Then we [crosstalk 00:15:05].

Stephanie:

That's awesome.

Colin:

Yeah.

Stephanie:

I like the idea of working backwards. I think enough people don't think of, "What do I want my end result to be, and how do I make sure to get there?" Like you said, they rely on, "I have enough friends who will buy," which I've also experienced does not work. Friends and family [crosstalk] can only go so far. Yeah.

Colin:

People forget. People get busy. They have busy mornings. They forget. You need a big boost all at once to come out of the noise on crowdfunding. We ended up being the number two trending topic on Indiegogo.

Stephanie:

That's awesome. How did you go about building your email list? Because acquiring emails for the price that you did is very good. Conversions are very good. You can get a ton of emails these days, but a lot of them probably wouldn't be qualified if you don't do it the right way. What kind of tactics did you use to get good emails who are qualified buyers to make sure that they actually ended up converting when you launched?

Colin:

That's a great question. First and foremost, if you're going to do a crowdfunding campaign, I would recommend hiring a digital agency that specializes in crowdfunding, but I would be very careful about whom because there's a ton of sharks and predators in this industry who will take your $2,000 set up fee, and they'll promise you the moon, right? 

Colin:

There is one agency I'd recommend, my buddy, Will Russell, he's the man, Russell Marketing in New York. And I trust him with my life, so I hired Will. I had known him tangentially through the last place I worked at. And he basically flew out the boulder. We sat down and we white boarded things out February, 2018 about our plan for the crowdfunding campaign. And basically the method was he had these emails from past campaigns that were early adopters, right? There are people who had backed Kickstarter campaigns before, and you can get lists like that in other places. Then you begin to build one, two and 3% lookalike audiences on Facebook. From those lists, you're able to advertise to other people who are likely early adopters. You build a landing page. We use kickoff labs as the software for our landing pages that hooked into our Google analytics. We did a photo shoot all in for $500 with me and all my best friends in Denver, Colorado. We were smoking cigars, drinking whiskey, having fun in bed, playing with dogs, eating pizza.

Colin:

Basically, whatever makes us laugh is what put on camera. And so, that was what we did in February 2018. We built those landing pages and that content with our first photo shoots, and all the copy that we wrote was just coming from my two fingers or 10. And then we just basically ask people, Hey, do you want to walk into the best price you're ever going to get on the best bedsheets you're ever going to feel? And we had three core value propositions for any crowdfunding campaign. You generally need three core differentiation propositions. One was that it's literally softer and cooler than cotton. And I led with that because I think that people are selfish and won't buy a sustainable product, if it's not better than the unsustainable version.

Stephanie:

Yep.

Colin:

Value prop number two was that it was sustainable, and value prop number three was that because I knew how all these retailers worked, and I know the margin share that Bed, Bath and Beyond takes from this category, which was about 40%, the price that you're paying is going to be traumatically lower than the price you pay for comparable luxury, sustainable options in the store. And those were our three value props and it really resonated.

Stephanie:

That's great. So what is your customer acquisition strategy look like now that's different than maybe what you did with Indiegogo?

Colin:

Now? I mean, now I have an in-house marketing team, a four person team. They're absolutely wonderful. And Sarah, our VP of marketing, is total genius, and she is someone who on the performance marketing side I think is unmatched. And I basically give her, to be completely honest. I give her free rein at this stage because a founder's skillset is fundamentally different than a CEO skillset. And I'm doing my best to transition from founder to CEO. And part of that is not micro-managing. And frankly, being okay with a much more boring job of facilitating, supporting, financing and managing versus being the creative, being the brand voice, being the copywriter, being the photographer and the videographer, and the Facebook data analyzer, and the Amazon ads creator. I can't do that anymore because it just doesn't scale. And it's also a good way to get talented people to leave when they feel like they're being micromanaged.

Colin:

So in terms of our actual strategies, basically, it's all direct to consumer on our website, sheetsgiggles.com and Amazon. And we've got a core channels of Facebook, Instagram, Google, and Amazon as our digital spend. We do some podcasts advertising, so definitely get in touch about that. And we also do radio advertising on Colorado Public Radio and a few other stations. And then we've tried direct mail, we tried a few other funky things. Nothing has the [inaudible] that digital tends to have.

Colin:

And in terms of email strategy nowadays, we actually don't email people nearly as often as we used to. In the very beginning, when we launched them Indiegogo, we'd email people maybe once a week. Now we're probably emailing people once a quarter, which is really crazy for a direct to consumer brand. Like every direct consumer brand in my inbox blows up my inbox four times a week like, buy more of our shit.

Stephanie:

Yeah.

Colin:

And so, the amount of sandal emails that I get from my sandal company is ridiculous. And so we email people only when we want them to take a very specific action. And that leads to open rates of high forties on emails, which is really, really stellar for open rates on emails. And we make sure that we use that wisely and we don't over innovate people.

Stephanie:

Great. So what are your favorite channels right now? Of everything that you just mentioned, is there any channel that you're maybe putting more budget into, or that you're seeing higher success with?

Colin:

I can find a row ad that beats Facebook, I will pull all my Facebook tomorrow, but they're definitely the highest row ads. Branded search is obviously the thing that's going to be best in the long run. So we spend a lot of time building up our brand recognition with people and our brand affinity, and then just earned media is really good too. We have a PR agency that we employ and we got covered yesterday by the Daily Beast, and we've been covered by Real Simple and Forbes and Apartment Therapy. We are Apartment Therapy's Best at 2020 picks, and a lot of other publications. We've been on today.com and Amazon gives us a lot of shout outs because of the philanthropy that we do.

Colin:

And so that's been really helpful to have Amazon as a big partner in our PR and in our discovery and exposure. So overall I would say Facebook and earned media are probably our two biggest ones. And then I do love radio and podcasts advertising, and I'm trying to figure out how to make that funnier for the listener. And so I'm currently recording a few new podcast ads that I think are going to be really funny and not in a really bad Geico, not funny at all way, but actual bits on the radio.

Stephanie:

Oh, give me a bit. What are you working with it? [crosstalk] You can practice in here. There's no judgment.

Colin:

Okay, great. Great. Great. So, I've got one that I think is pretty funny in a meta sort of way where I want to go on a podcast and be like, hi. Have you ever the CEO of Harry's do his thing?

Stephanie:

Yeah.

Colin:

I'm not famous, but I'm the CEO of Harry's.

Stephanie:

Yeah.

Colin:

So, I'm like, hi, I'm Collin, the CEO of Sheets & Giggles. That's probably means nothing to you, which is depressing, a little sad. We're a young company, we're based in Denver. We do some good stuff. Oh, we sell bedsheets. I should probably lead with that. God, how does the Harry CEO do this? And basically go with that. And then, somebody in the background goes 10 seconds. 10 seconds? And I'm like we sell eucalyptus bedsheets. They're sustainable, they're softer than cotton. Go buy them at sheetsgiggles.com. And that's the end of that. And then-

Stephanie:

That's actually catchy. I like that because a few people were like, "What is this dude going to say?" And then [crosstalk 00:24:12].

Colin:

And then I want to record four or five versions of that, that run on different roles. And basically, it moves from okay, they gave me a second take, I got it this time, I'm calling, CEO Sheets and Giggles, again, we sell bed sheets. I feel like that's obvious, maybe not that obvious. I don't know. If it was just called sheets without the giggles, it'd be a little more obvious. And then somebody's like, "10 seconds. And I'm like, "Oh, my God," and then get back into it again. And so, I think that those little bits and the nonsequiturs and stuff is very much our comedy and the trailing off and the tangents. And so, I really want to write a few different bits like that, that really flow with one another.

Stephanie:

Yeah. That's pretty great. I can't wait to hear this on radio or other podcasts as I think those will all do well. How do you-

Colin:

Well, you heard it here first.

Stephanie:

Yeah. You heard it here first everyone. This is special. Do you ever feel like selling through humor, like that could hold you back in a way because sometimes I see some brands where that's so much their angle that it gets away from the product because they get so funny where you're like, "Wait, what are you actually selling again?" So, how do you guys balance that to make sure you're still selling, but in an innovative, new way, that's setting you apart from others.

Colin:

It's actually a stellar question. I see that all the time when I see an Instagram brand that's just pure, pure, pure, funny without ever talking about their products in any way or ever talking about their reviews or their sustainability. It's just, "Buy our shorts because we're funny." It's like, "Dude, they're polyester shorts. I'm not going to buy your polyester shorts because you're funny."

Colin:

But the thing that we do, I think, that is not unique, but I think is smart is we basically let our reviews do the talking for us. So, we always say we're not serious, but the sheets are. And that's our mantra is, "We don't need to sell the sheets. Our reviews sell the sheets. Our stats sell the sheets." The amount of water we save, the pesticides and insecticides we save, we plant a tree for every order. We've got 3000 reviews on our website, 4.8 stars and we don't hide our one star and two star reviews like a lot of other consumer brands do. We have 845 reviews on Amazon as of this morning, I check every single day. I personally, as a CEO, read every single review that comes in, we have a Slack plugin that pulls every single review and puts it in front of my face. Every time we get one in live time on Amazon, we're four and a half stars on Facebook. We're 4.7 with 116 reviews, I think.

Colin:

And so, that type of cross channel confidence in terms of review score is really important for the consumer. And then the sustainability, the planting of a tree for every order, we give you 10% off if you donate your own old sheets to a homeless shelter, we pledge 1% of our profits, time products and equity, to local Colorado charities, we've donated $40,000 this year to Colorado COVID-19 emergency relief. The stuff that we do, I think, really speaks for itself and we don't have to really broadcast it and advertise it, even though I just obviously did. Instead, we just lead with the humor and then let people read more if they want. And truth be told, I think the most limiting thing, and you kind of touched on this, is that not everybody's a reader, especially when you're talking about Americans, no offense to... I'm a red blooded American, but we don't read.

Colin:

My old mentor at a toy company told me with the packaging that they made, their mantra is, "If you're asking people to read, you'll lose." And so, that's probably the biggest limiter is that a lot of our comedy is very copy heavy. A lot of other people are more visual or meme based or slapstick and video and we're much more copy heavy. And so, I like to think about us as sort of like the Seinfeld of bedding brands, which is probably the first time that's been uttered in the sense.

Stephanie:

Was that your Techstars YC type of thing of I'm [crosstalk 00:28:24]?

Colin:

We went to Techstars. They were like, "Why should we have a bedding company in Techstars?" And I think I was just like, "Why not?" And they were like, "We never thought about it like that." I was like, "You're in." But yeah, the Seinfeld of bedding companies was the way that I always thought about it. It's a brand about nothing. And by being a brand about nothing, it really is a wonderful way for us to be a brand about everything. And that was the beauty of Seinfeld, which has been my favorite TV show obviously, is that every episode was about its own little subtopic and it didn't have to have this overarching theme or story arc and that's great with us.

Colin:

As one day, we can donate $12,000 to the world wildlife fund to save koalas, another day we can donate 40,000 to COVID-19 relief, another day we can donate thousands of dollars to Black Lives Matter organizations, another day we can plant 20,000 trees for last year's orders. And we don't have this kind of overarching thing that we push on people. Instead, they can just discover it if they want to keep reading. And then we just try to make the copy entertaining for them to find their way through our website.

Stephanie:

Cool. Yeah. That a good way to explain it and yeah, it makes sense how you guys do it. So-

Colin:

It is limiting though. Yeah. When you're building a brand, you want 20% of people to really viscerally resonate with it and 80% of people to either be mad or react poorly to it and then that way you just don't want indifference. That's the biggest thing is I see so many direct to consumer brands that are the next shiny thing like, oh, the best apparel you'll ever buy or the best makeup or the best food or... They're all the same exact brand and it bores me to tears. The white stuff on the white walls with the white curtains and the white room. It's like, "Oh, just kill me."

Stephanie:

Yeah, completely agree. So, how do you encourage reviews? You were mentioning that you have a ton of reviews. How do you get people to follow through and actually take the time to give you your reviews?

Colin:

We, again, brand about nothing. We give to people who leave reviews free pizzas every week for no reason. It's just like, why pizza? I don't know. Pizza's good. You like pizza.

Stephanie:

Okay.

Colin:

Does it have anything to do with bedding pizza? People eat pizza in bed, I guess.

Stephanie:

I guess. Yeah. Not on my nice eucalyptus sheets though I'm not going to.

Colin:

But they wash real easy. So, it's okay if you spill on it. No, but that's how we incentivize it is we just say, "Hey, if you leave a review there's a chance that you'll get two free pizzas this week," and who doesn't like free pizza? Communists that's who. And so-

Stephanie:

That's good.

Colin:

Actually, we say capitalists that's who. And so, we do bits like that and it's stuff like that, that I think really drives people into the brand and we get people who are like, "This is insulting. I'm a capitalist." And I'm like, "It's a bit. It's just a joke about free pizza." And so that's how we incentivize it mostly. And then again, really engaging copy. The subject line is good, we have high open rates on our review request emails, we make it so you can leave the review directly in the email-

Stephanie:

Oh, that's a good one.

Colin:

We don't overpay for review software. I can't stand the stuff that's thousands of dollars a month. There's really good, affordable review software out there

Stephanie:

Okay. Cool. How did you think about moving on to Amazon? Because we've had a couple of [DVC] companies on here. Quite a few. It's been kind of mixed where, some were very excited about Amazon. Some were like, "Oh, I pulled it off because it kind of walked down the brand and they could end up just copying us and making a white label," and so there's been a lot of mixed thoughts around working with Amazon. So what led you to wanting to utilize their platform? Obviously they're featuring you and helping you guys. What are your thoughts around having a DVC company on Amazon?

Colin:

Amazon is Amazon. It's the best partner you'll ever have and the worst partner you'll ever have, and exists simultaneously in the same platform. That's why you hear this sort of debate or dichotomy amongst founders where it's like, "Do you want to go on Amazon?" And the pros, right, are that 54% of Americans. I think it got up to 60% of Americans now start a product search on Amazon. They've trained the American populace to, when they're looking for a thing, go to amazon.com. Google has lost that battle. So it's a massive channel that you really... It's hard to avoid. You have discoverability. You could have channel dominance. If you rise to the top of search returns for a high volume query, you can just rack in cash with no marketing spend whatsoever for years, until somebody tries to come beat you.

Colin:

It's a really solid platform. The negatives are, of course, that Amazon is extremely impersonal as a company. It's hard to get people on the phone there, although we do have account managers now. It is expensive. They take 25 to 30% margin share all in when you end up calculating all the fees from most companies, which is a really, really difficult thing for a lot of small businesses to swallow. And then you wind up paying them more to advertise on their platform to give them money when you make a sale. And so they're really a good partner in a number of ways. They do a lot of really great things for their companies, especially the small business partners, but, overall it's a love, hate relationship for sure. And you can do one thing wrong and get your whole listing pulled. And that can be really devastating too. So overall for me, it's a no brainer because if more than half of your audience is starting a product search on a specific channel, you have to be on that channel, period. End of story. Even if you're only doing it for branded searches.

Stephanie:

Completely agree. So earlier you were talking about working with PR firms and different efforts to bring new people, new customers, your way. How do you guys have your backend set up to be able to handle fulfillments? What does your tech stack look like to be able to handle any surges in demand?

Colin:

Surges in demand are actually difficult because we... forecasting demand is extremely difficult. Forecasting inventory becomes extremely difficult and then you put those two things together and you have to forecast the amount of people that you have working on your warehouse team at any point in time, which is extremely difficult. And so when it comes to surges and spikes, we use a 3PL, third party logistics provider, to ship out all of our orders, both on our website and on Amazon. We do FBM on Amazon, instead of FDA. And so we are basically able to get probably 99% of orders shipped out within a 24 hour period. But when we do have big surges and big backlogs it can slip to 72 hours.

Colin:

Because we are paying for that 3PL service, they have a finite amount of people that they've forecasted to work on their thousand brand partners that use that share of the warehouse space. And it's a really good way to lower the cost overall and then, from a small warehouse operation, if you're running it yourself, because you're sharing that square footage with so many other brands and you're sharing a labor with so many other brands And it's a pretty straightforward process nowadays in terms of hooking up a 3PL. In the beginning for the first six months of the company, October 2018, through March 2019, I was shipping out almost every box myself, along with a three person team in Denver, Colorado. We had our own warehouse space. We had 1,000 square feet. We were packaging. We could do maybe 250 orders a day maximum. And we were just trying to burn getting through holiday 2018 on our own.

Colin:

It was crazy. It was so [crosstalk] hectic. I think I shipped 3,000 boxes in a three week period at one point in time with the rest of my team, working eight hours, 10 hours a day in the warehouse and buy everybody lunch every day. And it was great. I had my customer service team and they're working with me. But yeah, it was definitely a lot easier when you can scale up and use the 3PL. I do have some companies that run their own warehouse space that actually wind up with all the headaches that it comes with and migraines that it comes with. They do wind up having a lower cost per unit in terms of fulfillment than we do, so there's certainly something to be said for that. But I think that right now we're at the 3PL stage for sure.

Stephanie:

Yep. That makes sense. All right. So we have not too long left, so I want to jump into the lightning round because I think you're going to have some good or funny answers. Lightning round is brought to you by Salesforce Commerce Cloud, our sponsors. They're amazing. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready?

Colin:

Okay, I am ready.

Stephanie:

The first one, what is the biggest fail that comes to mind when starting a DTC company that you experienced?

Colin:

Our packaging was white in the beginning.

Stephanie:

Were they white walls, white sheets, white, everything?

Colin:

Well, the inside of the packaging was purple and the outside was white and our packaging was lovely. We've got knapsacks to wrap the sheets. We've got free eye masks in every box. It's lovely, but a white exterior box sent through any postal service is going to get absolutely destroyed. And so that was our biggest fail was we had boxes just showing up, just beat the hell from FedEx and UPS. And so we moved in, I believe, mid 2019 to purple exteriors and that's allowed us to be much more efficient with our shipping and have much better customer experience.

Stephanie:

That's good. I can imagine getting a white box knowing that my bedding is inside it going, "Ooh."

Colin:

So dominant. And so to protect them, we had to put them in polymailers and in brown cardboard boxes, which was a huge waste for the first six months of the company. Then we had people call us out on it. And I was like, "You're absolutely right. This is so dumb. Why are we doing this?" And so now we just slap a label on the outside the purple box, and it's so much better. Additionally, minor thing, a major thing, minor thing. We had plastic in the packaging for the first six months. We had a little plastic sheet around the sheets, inside the knapsack to keep them safe from any water damage during transit. And we got a couple of complaints from people, really peaceful, nice messages saying, "Hey, I expect better from a sustainability company to put plastic in the packaging, even if it's recyclable." And we said, "Okay." And so we removed the plastic and we put in tissue wrap now for a final piece of protection.

Colin:

So there's no markings on the sheets and I'm thrilled to have eliminated that plastic. And now we've shipped out tens of thousands of orders since then with zero plastic packaging. In fact, we're the only bedding company in the world that does not vacuum seal our comforters. And they ship in the box, ready to go directly on the bed straight from the box, no [crosstalk]

Stephanie:

That's a good one. I hadn't even thought about that and I was wondering, are you having issues so far? But if not, more people should be doing that.

Colin:

Oh, we had issues. We just replace them. I mean, it costs us money. Like, FedEx will rip a box and then they'll get damaged and they'll leave it outside in the rain and it'll get waterlogged, so we definitely have that. But I think it's worth it to eliminate the amount of plastic that we're saving.

Stephanie:

Yeah, I like it. What's up next on your Netflix queue?

Colin:

Oh. I just started Ratched last night.

Stephanie:

How is it? It looked too scary for me. I'm a baby.

Colin:

It's really good. You know, I like stuff like that that's a little trippy, and I'm also a huge Marvel nerd, so I'm still waiting for the next Marvel series, but that's a Disney Plus queue, so I cannot wait for WandaVision and Falcon and the Winter Soldier and the Mandalorian is in two weeks as well, so I'm really excited for that.

Stephanie:

You've got your whole queue set up. I like it.

Colin:

Yeah, I love that stuff.

Stephanie:

Well, I know you said people aren't readers, but do you have anything coming up on your reading list?

Colin:

Yes, I just started The Everything Store.

Stephanie:

Oh yeah, that's a good one.

Colin:

And I'm surprised I haven't read it yet, actually. And then I'm trying to read things from a different cultural perspective because I'm a 30-year-old white male who mostly hangs out with other 30-year-old white males, and so I've got a book called Well Behaved Indian Women that I just started, and I'm really enjoying it. It's a totally different cultural perspective. It's so foreign to me and it's really, really great to immerse myself in that. I'm trying to think if there's anything else up next, but those are the two big ones.

Stephanie:

I'll have to try that out. What new E-Commerce tool are you trying out right now or having success with?

Colin:

Oh, it's something called Gives, and I should get a referral fee for this. So basically, it is this really cool thing we're doing to allow people after check-out to, when they buy something, donate a percentage of their order to the charity of their choosing. So we just tested it this week for Prime Day because we had our Prime Day deal on Amazon and we had a lower percentage off on our website, but you could donate another percentage of your order as well, so it actually ended up being a lower price but part of that was donated versus just going into your pocket and it's really cool.

Colin:

So now, our customers moving forward, and we're trying to decide if we want to do this on only special occasions or on every day type of thing. We already plant a tree for every order, now we're going to be able to let our customers donate 10% or so of their order to a cause of their choosing, which I think is a really, really, really cool thing. I just don't know if the dollars and cents work, so we're testing it out to see what that looks like.

Stephanie:

Awesome. Yeah, that sounds like a good implementation. All right, the last one. What one thing will have the biggest impact on E-Commerce in the next year?

Colin:

I mean, COVID. COVID.

Stephanie:

Yeah.

Colin:

No doubt. It's blown up E-Commerce on a five to six year type of acceleration. The amount of people that are shopping online versus in-store has just grown dramatically, and I think that we're probably in this environment for another six to nine months, until a vaccine rolls out. So I think that this trend will only continue, and I think that that's been a huge, huge driver of E-Commerce, and I think it's both good and bad, obviously. It can be good for some industries and horrific for others, so it's also a logistics issue and everybody listening out there, when you order stuff online right now, it's not the brand's fault if it takes 14 days to get to you. FedEx is trying to hire 70,000 people by Christmas and they're not going to hit that, they're going to hit like 50,000, which is still a dramatic undertaking. But the amount of packages going out right now is just overwhelming the system that we built.

Stephanie:

Completely agree. All right, Colin, this has been a fun interview. Where can people find out more about Sheets and Giggles and yourself?

Colin:

I'm a pretty private person. I do have a public Twitter, Colin D. McIntosh. Sheets and Giggles, you can google us. SheetsGiggles.com is the website, no "and" in the URL, just SheetsGiggles.com, and then we're also on Amazon if you want to search for our sheets there, Sheets and Giggles. [inaudible] the sheets. And yeah, pretty easy to find. And then our social media, SheetsGiggles, so it's just at SheetsGiggles everywhere. On Instagram, Twitter, Facebook. We're a good follow, we promise. We don't just post pictures of our products all the time and people buy them. And we just hit 10,000 followers on Instagram, which I'm really excited about. We've never paid for a single follower, so it's fun to build this organic following over time.

Stephanie:

Oh, that's great. Yeah. Nice work there.

Colin:

Thanks.

Stephanie:

All right, Colin. Thanks so much for coming on. This has been a blast and we'll have to have you on again in the future.

Colin:

Thanks so much for having me. Hopefully when I come back on next time, we're a much bigger company and everybody's like, "Oh yeah, I've heard of that brand."

Stephanie:

They will have heard of it. Don't you worry.

Colin:

I hope so.