$2M/Month – Building a Successful Mattress Retail Chain – David Smith of Mattress Depot USA

Sushant Misra of TrepTalks: Hey there entrepreneurs. My name is Sushant and welcome to TrepTalks. This is the show where I interview successful e commerce entrepreneurs, business executives, and thought leaders. And ask them questions about their business story and also dive deep into some of the strategies and tactics that they have used to start and grow their businesses.

And today I’m really excited to welcome David Smith to the show. David is the founder and chief sleep consultant of Mattress Depot USA. Mattress Depot USA is a specialty sleep omni channel retailer, helping customers find a better night’s rest by selling high quality brand name mattresses and bedding products in a comfortable, relaxing environment.

And today I’m going to ask David a few quick questions about his [00:01:00] entrepreneur journey and some of the strategies and tactics that he has used to start and grow his business. So David, thank you so much for your time today. I really, really appreciate it.

David Smith of MattressdepotUSA: Hi Sushant, thank you very much for having me out.

Sushant Misra of TrepTalks: So, I did a little bit of a research. I believe you started your business a little bit more than 20 years ago. And you started out as selling, um, mattresses as a discount mattress liquidator. So, can you share a little bit about what you were doing, a little bit about yourself, um, and what really kind of gave you the idea to start a mattress

David Smith of MattressdepotUSA: business?

Yeah, sure. So when they kind of say you start your mattress or you start your business out of a garage, this was a similar situation. Uh, we rented a storage unit and we purchased mattresses from the different factories and how we started out as we would buy what they call their liquidation as is close out.

Mattresses. So these were [00:02:00] ones that were, you know, overstocks or had some slight defect or were a warranty exchange or something. And we bought these by the truckload and then we would, uh, you know, ship them, stuff them into our, our warehouse and, um, you know, do some guerrilla marketing and sell from there.

And, uh, you know, really you’re, you’re offering at that point a really yeah. name brand known mattress, but with scratch and blemishes. So, you know, no different than they do in the clothing industry, furniture, appliances. We were doing the same thing with mattresses, um, and really doing it from the ground up out of a storage unit.

Sushant Misra of TrepTalks: And did you have an entrepreneurship, like have you ever always been an entrepreneur and this was kind of like your next venture or what kind of really motivated you to, um, um, get into this business?

David Smith of MattressdepotUSA: Yeah, I mean, I’ve always had a little bit of a entrepreneur flair and [00:03:00] desire, um, kind of to run my own show and, uh, to strike out and work harder, you know, on my own.

I started my first business actually when I was about, you know, well, I mean, I was washing cars stuff back when I was 12 years old, 13 years old around the neighborhood. And, um, even before I turned 16, I, um, got a pressure washer. So, And started a pressure washing. And then I learned how to paint and started doing painting.

So I was painting houses throughout college, uh, really started a pressure washing and painting company during the college years and actually after college continued to run that because it was doing very well. Um, I went to college and was trained in an accounting discipline and took business courses, but you know, none of the accounting firms were going to pay me what I was making in a couple of months in the summer painting homes.

So it was really hard to give that [00:04:00] up. Um, at some point I. You know, decided I didn’t want to keep painting and running this business. It was hard to scale that business. I think I got up to about eight, nine employees at one point. And I just decided, Hey, I’m going to go back. Um, I want to go back into the corporate world and, you know, learn some further disciplines in business and, you know, wanted to go into commercial banking where I could learn a lot more about a lot of different types of businesses and what makes them tick and stuff.

And so it was always that entrepreneurial passion that kind of drove me even. After I sold that business after college and then went back to business school and after business school went to go work for a commercial bank and learn more about a lot of different businesses and work with a lot of different [00:05:00] entrepreneurs.

And that was fun, too. And I always. And I found them very similar to myself when, you know, we’re sitting across the table and talking about, you know, credit terms and, you know, working with the bank with their loan portfolio of customers and stuff. So it was really fun and I enjoyed that.

Sushant Misra of TrepTalks: So how, how did you go or transition from there to mattresses?

Did you just see an opportunity and kind of seized it or,

David Smith of MattressdepotUSA: um, So I actually ran into a colleague, um, who had moved back, uh, into, uh, I had moved back from, I was living in San Francisco, I was working for a commercial bank down there. They had transferred me up to the Seattle area where I was from, where I had gone to high school and, you know, which was where I kind of wanted to end up.

Uh, I ran into a colleague that I hadn’t seen for a while who had also just moved back and he was doing marketing. He was doing radio marketing, [00:06:00] so we kind of said, Hey, let’s, uh, you know, let’s catch up. Let’s go out to dinner, kind of see what each other’s been up to. If we hadn’t seen each other in a while.

And he, he, um, he goes, that’s great. I’m, I’m, I want to bring a friend of mine and, uh, want you to, to meet him. And I said, great. So. He picks me up and, uh, uh, we go out to dinner and, you know, this, this individual had a, a mattress store where they were specializing in the liquidation. And at the time we had a competitor who pretty much I thought had the monopoly in that market up here.

And I asked him, I’m like, well, you know, how do you compete with. You know, the sleep country guys and just, you know, kind of said, well, it’s, you know, price, price, price and how I’m buying and selling. They can’t compete with me. My issue is just, you know, how I can scale and how I can, you know, get supply because supply is limited in this [00:07:00] version.

But he said a lot of other things as we’re sitting there at dinner that I just knew. Um, interest me and piqued my interest in that. I thought, you know, I kind of put my banker hat on. It’s like, well, I’d be doing this and I’d be doing that. And so I saw a lot more growth and opportunity into it than he actually did.

So, um, my, my original colleague friend and I, um, kind of decided we would get into the business, but didn’t want to step on his toes in the current area. So we decided to open up down in the Las Vegas market. So I really got my start, it was about 1998 in Las Vegas. Las Vegas was growing like a weed, we did a lot of research and demographics.

He left his marketing job at the radio station, I continued to work at the commercial bank. But… You know, together we grew this business. I did a little bit more remotely and flew down and helped them on, [00:08:00] on weekends. And, uh, we started opening up stores down in Las Vegas. So that’s how I got into it. And it just got into my blood at that point.

And, um, I, I was good at it. It was just natural for me. Um, it was a product I could sell really easy, uh, for me. And so working with him, we grew a couple of stores, but still kind of came to that point where he didn’t want to keep growing, you know, we were at three stores, um, again, supply, you really had to work on keeping your supply going and finding deals, and he just kind of had this steady flow to support those three stores.

I kind of asked him to buy me out and he’s, he, he wanted to do that and, um, take full ownership down there. And I thought, well, I’m just going to open it up here. You know, so when I moved, when I, after he bought me out about, I gave [00:09:00] it about six months. I started putting in the, uh, uh, the trenches to open up and take all that knowledge, all my networking that I had done and contacts and started opening up in the Seattle, Washington market.

Sushant Misra of TrepTalks: And then you kind of changed your business model from going from like a liquidation kind of a business model to now becoming more of a retailer, purchasing from brands and then selling it to customers. Can you talk a little bit about, yeah.

David Smith of MattressdepotUSA: Yeah, over time, you know, we really, as I kind of mentioned a couple of times, supply could sometimes hinder your success, which, you know, it’s, it’s like if you had a unlimited supply of 10 bills that you only paid 8 for, you know, you’re always going to be able to sell the 10 bills for 10 bucks, it’s just you’re maybe even nine and split profit.

But if you’re limited on supply, It just challenges your growth. And so once [00:10:00] I started opening up in the Seattle market, we kind of grew pretty quickly to about four or five stores. And it became evident that, uh, the supply wouldn’t support further growth. And I really saw an eye to, you know, to be honest, 50, 60 stores at that point, I, I had my eye for expanding that, that, that big.

And so I had to start moving into a model of how can I, you know, continue to sell mattresses. You know, still kind of off of that discount realm. And we started bringing in the first line quality mattresses, warranty mattresses, and be a little bit more of a traditional, you know, specialty retail mattress store.

And as we just, you know, we did it slowly. We didn’t do it overnight. You know, we kinda, we kept opening up stores, but then each time we did, we’d reduce the amount of liquidation stock [00:11:00] that we would carry in those stores. And so it kind of gradually morphed to that point where, I don’t know, when we got to about 20 or so stores, we were barely, you know, really having liquidation close out, especially not that we still don’t, but it’s, it’s just now it’s a little bit more targeted.

We may not, you know, we may buy a couple of trailers if we get a really good deal. We just did a transaction where we were buying a couple of truckloads of purple mattress. We don’t even carry purple in our store, but we had an opportunity to buy a couple of truckloads of clothes outs. And we’ll be sprinkling those in throughout our store.

So we’re still doing it, but I would say it’s, you know, 5 percent of our business where at one point it was 90 percent of our business.

Sushant Misra of TrepTalks: So when you started out 20 years ago, it almost seemed like, you know, this market is a very. Good market where, you know, [00:12:00] where supply is the constraint and not the demand.

It almost seems like, uh, you know, really, really a good market to get into. Um, can you talk a little bit about the mattress market in the United States and. Um, how has it changed since you started? Is it still kind of like supply is the constraint and, you know, you can sell as much as you can. And, you know, the growth has kind of, you know, um, how much you want to grow or has it kind of changed because there’s A lot more competitors now.

And, um, of course, you know, now you have everything online as well. Can you talk a little bit about the market and how it has changed since you kind of started

David Smith of MattressdepotUSA: out? Yeah. And remind me if I forget when I answer the first part of your question to talk about the online portion, because that is a big.

Discussion in itself. But when I say supply constraint, I mean, specifically the liquidation clearance [00:13:00] closeout deal pricing. And when I went to give you an idea of a, uh, a deal, you’re talking about paying maybe 100. For a mattress that regularly would wholesale for eight or 900 and that would retail for 1, 800.

So our model at that time was we’d buy those, we’d mark them and say 900, 50 percent off, which we were, and we’re selling them for 900, but we’re only paying a hundred, but there was only a limited supply of that mattress. Because it was a clearance close out on the first line mattresses. Obviously there’s, there’s all the supply in the world.

So not that they don’t have supply issues, but, um, the demand stays relatively steady overall. It is, [00:14:00] you know, you can drive demand on the lower price and a little bit easier than you can on the higher end spectrum. And that’s probably true for a lot of goods. Uh, our industry is a very stable industry, you know, it kind of in a good year, it grows 5%.

And in a bad year, it may be dropped 2 or 3%, 4%, right? So, it’s a very stable demand, but the. The supply equation of it that I was really and liquidations. So as we more into more of first line, um, carrying all the national brands, all the warranties, uh, mattresses, we had to, you know, look at more traditional ways of advertising and ways to compete with those competitors in the market.

[00:15:00] The industry has some really good dynamics and these are some of the things I learned when I was still in banking and I was studying the industry, you know, why do I want to go in the mattress industry? Okay, well, here’s a nice, you know, uh, interesting fact. Mattresses don’t go down in value, they only go up.

You could buy a mattress today, stick it in a warehouse, and five years later, you know, Open up that warehouse, sell the mattress for more than you would have five years ago. Because it continues to go up, usually at about the rate of inflation, but the, you know, overall, it doesn’t, it doesn’t degrade in value because, you know, mattresses for, you know, lack of a better word.

Aren’t that, you know, fancy from a standpoint of they’re meant to sleep on. They’re not fashionable. Um, they don’t [00:16:00] deteriorate. They’re not like food. They’re not like, you know, some other products where like a fashion product, where if you make a whole bunch, you know, next season, it may not be in fashion.

That shirt may not sell. Um, so that, that was one of the really attractive things in the industry that I liked was. You have a product that pretty much will hold its value. And at some point, you’ll always be able to recoup your money out of it. Now, the, the demand will still ebb and flow. So if you can control your inventory and your supply, theoretically, you can keep a pretty stable business.

Um, that in lies makes it a competitive business. It’s a product everybody needs. Uh, everybody pretty much sleeps on a mattress. And so You know, it’s not even everybody has a phone, right? You know, [00:17:00] um, and not only that, most households have multiple mattresses. Think of it more like a TV. Um, you know, most, but again, not every household has a TV.

Those that do usually have multiple with mattresses. Every household has a mattress. Everybody needs a mattress. And there’s usually multiple in each household. So, demand is there. It’s steady. Supply is important. It’s usually steady, but can kind of fluctuate. What drives that industry then becomes competition.

It’s highly competitive. Uh, how do you separate yourself? Because there are a lot of players in it. Um, over the last 25 years, it has changed a lot. It went from more of a mom and pop industry, where there were a lot of local, small players. In the industry to, you know, there’s like one there used to at [00:18:00] least at some point there was like at least four or five very large change.

Now it’s down to one really large chain. Um, you have other channels that are selling that, you know, are large and they bring a level of competition to the industry. So it’s evolved like that to where our channel, our distribution channels have changed, our competitors have changed. And we’ve had to obviously morph change along the way We’re kind of now, you know a little bit more Hard, you know, I would you know, we’re considered maybe a mom and pop even though we have, you know, 32 store locations with our branding We’re still relatively small when you look at somebody like a mattress firm that has, you know, 2, 800 stores Uh, but then there’s a lot of other chains that have two and three hundred chain stores And then there’s a lot of really small You know, and those guys, there’s not as many as [00:19:00] there used to be there.

You know, they maybe have two stores or maybe only one, right? You know, um, so that’s been interesting. What’s really changed obviously in the last, let’s call it 15 years. And I would say more so in the last five to eight. would be the online channel distribution of the industry. So, you know, probably right around 2005 and six, we started seeing online business, you know, mattresses being sold.

I think Casper started somewhere around them and they were kind of the first big online mattress. They got traction, but it didn’t feel like they were taking much from the, um, independent retailers. But I think where, where that, that market started to shrink first was on the lower end price points. And so the online [00:20:00] market, if you think about it, a mattress, Quality is determined by weight.

I mean, it’s really that simple. And there’s a lot of products that it’s that simple. You know, fabrics. Generally, the weight of the fabric is, determines the quality of the fabric. Mattresses, they’re the same. Usually the weight of a lot of stuff, um, determines the quality. Well, to make something shippable across country via UPS, You got to make it as light as possible.

So generally the quality on those online mattresses are designed to be inferior and less quality than the mattresses that are delivered locally to your independent mattress store that have to then be delivered by truck to your house because they’re so big and bulky. And that big and bulkiness always keeps a little bit of the market.

Off of being online, and I think [00:21:00] a bit of having to try and, you know, try the mattress out because you can’t tell how a mattress feels by looking at a mattress. Yeah, you can, you can see what it looks like. Um, you know, same thing with clothes, you can see what they look like, but you don’t ultimately know the quality or how they feel so you tend to, you know, maybe repeat your purchases.

From a store that you know has that quality level that that you like but with mattresses It’s it’s interesting. So we’re actually now seeing a little bit of a decline In the online mattress, uh, market share, uh, not as quick as I’d like, but it’s, it’s declining, uh, their portion of the share because you have people that may have bought an online mattress five, six years ago, and it’s just not holding up.

And it’s obvious the quality isn’t there. And they probably never really liked it that much in the first place. [00:22:00] And they see, you know what? This is a product. I need to go in. I need to try it out. I need to feel it and make the purchase. Um, but they still, like I said, there’s still probably 25 percent of the share.

Most of that share though is the lower end market. That is people kind of going, well, I need a mattress. I just, you know, I got a contract job here. I’m going to be working here for a year. I’m just going to buy cheap. Online mattress what we kind of call convenience purchase.

Sushant Misra of TrepTalks: That’s that’s so interesting So even your online channel is kind of 25 and then your stores are 75

David Smith of MattressdepotUSA: well our online’s less than Than that i’m i’m talking the overall mattress market share in the u.

s. We’re we’re actually closer to five because We try and drive people into the store more through that channel. Um, we, you know, we maybe source, [00:23:00] you know, 20, 25 percent of our business through online channels, but ultimately that transaction happens in the retail store. Um, and you know, we’re probably, there’s.

You know, 5 percent of the business is purchased online in the shopping cart. And, you know, then we delivered that customer and, you know, we didn’t hear about it, but we really still. You know, even with, you know, having live chat sessions online, we try and get the customer into the store if at all possible, uh, you know, and sometimes it’s a customer that’s been in the store and they’ve done all that and they just want to, Hey, I already know what I want.

Saw it in the store. It’s that, and they purchase and that’s great. Um, but just, you know, somebody across the, you know, the United States shopping on the web. Selecting a mattress, you know, a much smaller [00:24:00] portion share than the overall portion in in the U. S.

Sushant Misra of TrepTalks: I think I think that, yeah, I think that that makes a lot of sense considering that.

The big factor in mattresses with, you know, and it’s, it’s probably a lot of hassle shipping really heavy mattresses. I mean, on your website, I see, you know, there’s mattresses 29 to 299 to thousands of dollars. Um, is it You know, what is the bottom line? You know, you’ve been selling mattress for so many years.

Um, are people, is it really about the weight? Like the, the, the heavy, the heavier, the material, the comfortable is it’s going to be the, the less back problems it’s going to cause for people. What is like, you know, when you see advertising on TV and things like that, and even companies like Casper, you know, they, they come up with like all these different, you know, factors of, you know, um, this is going [00:25:00] to cause you less back problems, better sleep, all these things.

What is kind of the bottom line and what is the biggest market share? People I’m assuming not everybody’s buying like 5, 000 mattress. Um, what is the biggest kind of market out there for this?

David Smith of MattressdepotUSA: Yeah, right now the stats show about, you know, about 27 percent of the markets, what they call ultra premium or 3, 000 and above.

Uh, which we have, you know, a good selection of those ultra premium mattresses and what makes those ultra premium? Well, first of all, it’s the quality of the materials in the mattress. You know, they’re using the highest quality foams. They’re using silk and cashmere into the comfort layers. So it breathes very naturally.

Um, the, the steel and the coils, yeah. Is two or three times tempered. The pocketed coils are wrapped with [00:26:00] a much more dense, stronger pocket. There’s all these different components within a mattress that, you know, you can go cheap on some of the components. You can go less expensive on all the components, which would make it a real less expensive mattress.

Or you can go real high and inexpensive on all the components. So the different various degrees of mattresses and where their price point at a retail is really a function of, you know, the quality of the materials that are put into the mattress. Uh, in the first place, you know, and so, you know, as far as, is there any one perfect mattress for anybody?

Absolutely not. And thank goodness, because if there was, this would be a really, really difficult business because everybody would just buy that mattress and there would be no margins on it. Nobody would, you know, I mean, it would. There, there would be no innovation, no nothing. So it, the [00:27:00] fact that a mattress that might be comfortable for one person’s not necessarily comfortable for everybody leads to the dynamics of the industry to where.

It’s really important for customers to come into the store, lay on the mattress, try the match. We can encourage customers to come, come in and sweats. I mean, we’ve had customers come in their pajamas, like literally, I mean, of course you see some of the kids nowadays goes to school, it’s in their pajamas, so it’s not that big of a stretch, but the, the, the.

You know, need to get in there, try it out, take your time. And, and then we talk about their different sleeps, you know, how they sleep, everybody sleeps, you know, uh, you know, there’s three positions or either on your back, your side or your stomach. Some people are two of the positions. Some are one position only.

Some are all three. And based off that we can take a customer down that funnel of what mattresses make the best [00:28:00] sense. You know, obviously budget’s always a consideration. I mean, there is a good quality firm mattress above 3, 000, and then there’s a really soft quality mattress that’s above 3, 000. But there is also in that, you know, mid price point, And in the lowers, you know, you know, in that what we would call the the promotional lineup, there’s still firm mattresses and softer mattresses.

Now, again, it’s all the components within them. They’re not going to feel as luxurious. Um, doesn’t mean somebody can’t buy one of those and have a good night’s sleep. No, I mean, um, but they probably have to be younger, more vibrant and you know, their bodies have to recover easier than somebody that needs a higher quality mattress to get a really deep sleep and not wake up with aches [00:29:00] and pains.

Because they’ve got, you know, uh, really poor support in their mattress. Some people don’t need much support. Some people sleep really good on the ground. Like it’s, it’s interesting. You get some people they like as firm as mattress is. Is we have and we’ve got some really firm mattresses, but they still might say Oh, you don’t I mean any firmer you might as well just sleep on the ground So, um that it is funny that some people are just as comfortable Uh, in that, that type of, uh, asleep environment, but so we’re all different, um, and that’s all caused by our body types, our age, our health, um, you know, body weights, uh, you know, all these things determine the right mattress.

And so we have to have a selection and therefore we try and carry as big as selection [00:30:00] possible and Get the right mattress for that customer when they come into the store and that’s a little bit of a You know, it, it, it, it, it’s a process. It, you can’t just, we can’t hire people that just kind of want to point to mattresses, they have to almost have like a doctor consulting visit with the customers that come in, if they’re going to get them into the right mattress.

Wow. Very interesting.

Sushant Misra of TrepTalks: Um, from a business perspective. So you said that now, obviously there is, uh, there is more competition. There are other chains. Um, if a business is trying to get into this industry and this business is the bottom line really on who is a good business person who can kind of reach the scale so that, you know, they have the staying power.

Um, Like, what is, what would you say is your kind of the value [00:31:00] proposition right now, because I’m assuming that, you know, the mattress of the brand names that you’re selling is kind of, you know, available at other stores as well. Um, you did mention that there is, there is that consultative approach, you know, you have to give the customer more of that, you know, uh, consultation doctor kind of a thing.

Um, What is, what is your value proposition? And is it really that as a business person, you’ve kind of, um, been able to reach the scale that really makes your business more, uh, more, uh, resistance to, uh, competition, uh, than what a smaller kind of a store.

David Smith of MattressdepotUSA: Yeah. I mean, you know, to be honest, I do believe that, you know, if you think of it in terms of it’s a product and.

Um, to be successful in this business or having this product, you got to be a [00:32:00] really successful business person. You’ve got to have that business mind and that is I’ve seen a lot of competitors come and go in this industry. And I mean a lot. I can’t count on my hands, toes and feet like it. Two of them just went out in our area, guys that have been in business for, you know, probably about close to 10 years.

Um, just went, just went out of business the last, like in the last six months. And, you know, of course we go try and get some of their good at salespeople and, and bring them in. So, you know, I know it’s not always their, their salespeople. We like to think that we have some of the best sales consultants and that is an important part of the business.

But it’s everything, right? Like, I mean, I’ve seen every mistake possible that has brought, you know, retail mattress stores down, you know, and they’re, they’re [00:33:00] really the same that you see with any of the other stores that I see kind of fold up shop over time. And, you know, one of the things I’ve always kind of done is, you know, our local.

Um, business. Um, it’s kind of like the business journal. It has all the local companies and, you know, it gives you all the, you know, tax warrants in the back and it shows you all new leases side and all that kind of stuff. I always peruse that, you know, always looking for names under tax warrants. Okay.

Somebody didn’t file their department of revenue sales tax, right? Like, like here’s somebody running their business and they’re running their business out of a cash coffers, uh, sales tax, or, you know, uh, somebody in the business, you know, stepped up and, you know, bought too much merchandise too quick and, um, you know, couldn’t, couldn’t liquidate it in the time.

So. You know when it comes down to business the [00:34:00] one important thing is cash is king, right? And so you have to keep a level of cash Available to, you know, weather out the storm because, you know, we’re all going to go through slow times, you know, uh, together and you got to have cash built up a reserve to weather that storm.

You got to make sure you, you know, you’re hiring employees that aren’t stealing from you or, you know, if you have a way to. You know, figure out if they are very quickly so you can get rid of them. Um, So there’s all these different business avenues that are really important that Are important in every business and that’s I think ultimately, you know attributed to our success And, um, you know, ultimately I think do for, for most businesses and, you know, the, the, the cliche comes down to the people is, is important.

You know, we also say [00:35:00] location, location’s important. You know, if you have a really bad location. And you better have a really good salesperson because, you know, they’re going to the traffic and that is going to be really slow and therefore they got to close every person that walks through that door. If you have a really busy location that, you know.

You’re going to have more traffic. Therefore, you may not have as good a salesperson in there and you can be a little bit more successful. So those are kind of things that come down to people, um, you know, uh, all, all organizations are just a sum of the people of the organizations. And so. Uh, if you have a, if you have a bunch of, uh, you know, superstars, a bunch of Tom Brady’s bunch of Michael Jordan’s, you’re going to have a really good team.

Right. So that’s in lies same with business. Um, you know, if it’s just you, if you’re just a sole [00:36:00] proprietorship, then you need to be making sure you’re doing. Everything the best and you’re not always going to make the right decisions, but your right decisions have to outweigh your wrong decisions, because as soon as that scale gets flipped, that’s when businesses start to fail because more wrong decisions have been made than the correct ones.

Sushant Misra of TrepTalks: That’s that’s so true. Um, You mentioned you have about 32 retail locations right now. Can you talk a little bit about how you have grown over the years? Um, I mean, you, you said location is really important. I mean, what are you located throughout the U. S. Um, like, pretty uniformly and what, how do you go about, like, finding a new location or making the decision to say, yes, I want a new store at this place.

And, you know, this makes sense.

David Smith of MattressdepotUSA: Yeah, most of our locations are in the state of Washington. We have a couple in [00:37:00] Oregon. Um, we used to have a couple franchises outside. Um, you know, we had one in Atlanta, Georgia. Um, and so the, the closer to let’s call it the mothership. We can, you know, have some economies to scale on our broadcast advertising.

And so we kind of moved away from expanding too far out. Like I said, I really feel like we can get to 50, 60 stores just in the state of Washington, all within that same marketing zone without expanding too far outside into other States and throughout the U S. Would our model work? Yes, but you know, if we go into a new market.

We have to kind of expand to a size that makes the marketing, uh, that we do currently, um, you know, uh, able to pay for that locations and therefore, [00:38:00] uh, scale it. So, uh, Most of it, like I said, is, um, in, within, you know, a drive, you know, a day’s drive away, uh, we can reach most of our, our stores.

Sushant Misra of TrepTalks: And, um, the traffic in your stores, is, is it really now, I’m, I’m assuming in the state of Washington, your stores are kind of, uh, your brand is recognizable?

People, you know, if they think about mattress, you know, they can associate it with your store. Um, how, what kind of effect, what, what kind of marketing works well in this? Is it really, um, can you talk a little bit about your marketing and, you know, what kind of promotional programs you, you run to really drive the sale?

David Smith of MattressdepotUSA: Really from the beginning, we kind of thought about that. Hey, what, you know, what type of marketing do we want to have? That’s going to have some longevity because we want to build our brand. Um, we carry a lot of well known name brands, [00:39:00] but we don’t want to necessarily. Promote their brands without promoting our brand.

So, you know, we kind of came up with in the beginning We came up with our name mattress depot when people think of depot They think of train and people are like, well, what do trains and mattresses have in common? um And you know, the true answer is not a whole lot but but you know people like trains and and uh There, you know, there was a company called sleep train.

So, you know, when there were that company existed, uh, we kind of thought, well, let’s, you know, let’s put a little spin off that. Um, and, and let’s put some type of creative, you know, tongue in cheek type advertising. So. Um, we do, uh, advertising. We have a jingle that is, um, a pretty, uh, good jingle. We had that design done.

We bought [00:40:00] the rights to our jingle. Uh, you know, kids kind of like the jingle. They’ll come into our store singing the jingle. And that helps because it ties that brand with the jingle that we advertise. Jingles you can advertise on the radio, you can advertise them streaming online, you can, you know, obviously advertise them in broadcast.

So, that was one of, I think, the important creative things is when we came up with some type of marketing identity, we had this jingle that we could share with our brand. And then one of the things, you know, on our TV advertising, you know, I’ll be dressed up as a train conductor and I’ll do some pretty goofy dancing, uh, not too crazy.

Goofy and this kind of stems from, you know, in the past, I remember growing up a couple local. Appliance companies and advertisers. There’s this one appliance [00:41:00] company that the husband and wife would do the commercials together, and at the end, he was kind of dressed up in overalls, and at the end of the commercial, she would always take a pie and slap it in his face.

It was a very successful appliance company and the whole premise was, you know, he was this kind of tongue in cheek goofy guy and the wife was a serious one and she threw a pie in his face at the end of every commercial. Well, I didn’t really want my wife throwing a pie in my face every commercial. So I said, how about.

You can be the serious, you know, one in the commercials that does the talking, uh, a lot, and I will be kind of the more tongue in cheek, a little bit of the goofy guy, but, and at the end of the commercial, I’ll just do all these different dance moves, and What’s been kind of neat is over time, dance moves kind of are fashionable.

It’s really kind of interesting. I mean, do [00:42:00] you really want to go back? You remember the Macarena that was like, you know, people do the Macarena and, um, and then you had the floss that got, you know, really, uh, you know, and then Fortnite came along and then they had all these creative dances. Well, you know, I was doing this before Fortnite came along.

But it just kind of worked out that, you know, now every time we do a commercial, I gotta pick, uh, the new latest and greatest kind of funny dance moves. To do at the end of the commercial on our lead out, uh, along with our jingle. Um, you know, does that have anything to do with mattresses? No, but what it has to do is to get customers to remember when they need a mattress, because people don’t need a mattress every day, but there is a day they will need a mattress and they’re going to be shopping for a mattress.

And I want to be the first person they think of for however I get in their head. You know, so, you know, I [00:43:00] just want to get in their head so they give us a chance, they come into our store, uh, and ultimately, you know, that builds our brand. Um, so that’s, that’s kind of how, that’s been our philosophy and what we’ve kind of done on marketing pretty consistently through the last, you know, 25 plus years.

Sushant Misra of TrepTalks: I definitely have to find some of your commercials to see those.

David Smith of MattressdepotUSA: Yeah, if you go to our YouTube channel, I mean. There’s 90 percent of them are on the YouTube channel. Uh, we even have some that, um, I forget the name is one where, uh, everybody would dress up and then they would dance in the middle of, you know, time square and stop.

Yeah. Start to the answer. Well, we did, we did our version of that and, you know, we got a ton of hits on an online, we didn’t, we never did that one on TV and there’s a couple others we haven’t necessarily. done on TV, but they’re on the YouTube channel. And, uh, as you’ll see, they’re very tongue in cheek and, you know, they’re not too [00:44:00] serious, but, you know, they’re not overly goofy where, you know, I’m taking a pie in the face.

So

Sushant Misra of TrepTalks: definitely makes sense. Um, I know you, you offer same day delivery. I’m very curious. Um, I mean, your locations are all in Washington state. Are these your own kind of, um, trucks that do the delivery or you use like any third party, uh, logistic services for this?

David Smith of MattressdepotUSA: Yeah, so we have a central warehouse. We do have a full, you know, level of logistics and delivery crews.

Uh, but we also utilize third party and, um, you know, that’s, uh, sometimes that comes into play with a same day delivery. Now we don’t have a lot of people that, you know, necessarily need same day delivery, right? It’s You know, there are times customers call us from the airport and they’re getting somewhere I need a mattress and you know, can you make this happen tonight?

I don’t you know, so that does happen [00:45:00] Um, and and we certainly get the requests on the same day delivery. We have multiple ways of You know, making that happen. I mean, first and foremost, so we got to have a product in stock and, you know, um, usually that conversation will start out with the customer that knowing that they need to have same day.

We’ll make sure we’re pointing them in the direction of something we have in stock. And then, you know, we’ve got, like I said, we’ve got our own internal crews that we can dispatch to swing by that store in that area to go deliver to the customer. Or we’ve got third party companies that are doing the same thing for other furniture companies and you know other Amazon flex companies a lot of these delivery companies obviously um are doing it for multiple different businesses and you know They they can be flexible to swing on by and in dispatch and stuff for sure It’s not a fun part [00:46:00] of the business.

I will tell you. Um, you know trucks truck maintenance Truck drivers safety. It’s you know, it’s it’s not the part of the business. I enjoy. Yeah, the part of the business that, um, you know, makes us, uh, any more competitive than someone else. It’s a necessary evil of the business. Um, we’ve found a way to do it very efficiently.

And, um, but we’re always working on ways, you know, to limit our costs and, you know, um, that, that time, you know, we’re, we’re doing a lot of direct ships from factories if, if it is, you know, um, if it is a product that’s rolled, that’s shippable, um, you know, that’s. Customer on some of those lower price points.

Um, we’ll just all right. I’ll put that in, you know, ship It’ll be at your house in three days, you know similar to like they Ordered it online [00:47:00] only at least they got came in and tried it out and it’ll show up Uh, and then they’re okay doing the other part, but then some need that white glove delivery service.

They want it all set up packaging takeaway And then those generally have to be through our internal delivery crews.

Sushant Misra of TrepTalks: I would assume that, I mean, with this kind of a product, I, this, like the last kind of the handover of the product is probably really important from a customer experience perspective, you know, because that’s when they’re receiving.

So how they receive it and, you know, how, what kind of help they get when they’re receiving. I think that’s probably makes a difference from, you know, from a customer perspective.

David Smith of MattressdepotUSA: Um, And it’s the last, it’s the last thing they’re going to think about the business. So, uh, a big part of our business is repeat and referral business.

So, uh, it’s over 35 percent of our customers have either bought from us [00:48:00] before, or somebody, you know, referred them to come in and purchase from us because they purchased from us. So we call that repeat referral business. And it’s over 35%. And that’s great. Right? Like that’s important. Um, but you, you’ve got to have a good experience soup to nuts to want to refer somebody.

Right. And, you know, now maybe, you know, we probably have somewhere. You know, it was great experience all the way up until the delivery guys got there and, you know, they were in a bit of a rush and, you know, they scratched our wall and okay, you know, we’ll, we’ll fix it. Sorry. But, you know, it’s, you know, it happens.

It’s, you know, but it’s important part where, yeah, we try and make sure that our delivery team, especially when we’re doing that white glove delivery service, Provides that right up until the end for the customer because that’s their last point of context. If the customer takes the product from our store [00:49:00] home, then that last point of contact that salesperson when they rang it up and, you know, Um, they wrestle the mattress out of their truck up, up the stairs to their bedroom, you know, and if they scratch their walls, they don’t blame us.

But, um, so it is, it’s an important part, uh, you know, our delivery guys wear uniforms. They, you know, they’re clean cut, you know, they’re, um, you know, it’s tough. We don’t, we can’t have them too young because, you know, driving’s an important part of it, the safety of it, you know, our, our trucks are big billboards that are out on the road.

So that’s another form of advertising. And, you know, if we got somebody driving in and out of traffic, like crazy person, our numbers all over that truck, they’re going to call. You know, they’re gonna complain and they’re probably not gonna buy a mattress from us nor, you know, nor should they so Um, it’s it’s all those little details that you got to think about that.

Yeah, that that’s a important [00:50:00] portion of the business um with usually very little Upside, if you do it perfect other than, you know, it helps you get a good review online and then, you know, hopefully they’re going to refer a customer because of that. Um, they’re traditionally not going to all of a sudden, oh, buy more after their products, everything’s worked out good, right?

So, um, they’re, they’re usually making that full decision when they come in the first time. And, um, but the important part is, is. How they then refer our business to friends, family, coworkers. For

Sushant Misra of TrepTalks: sure. Uh, we are a little bit over time. Do you have five more minutes to continue going? Okay. Sure. Um, so last question before I move on to our rapid fire segment, you know, there’s every entrepreneur journey.

There’s always mistakes made lessons learned failures. Um, I mean, you’ve been in business for a long, long time. So, you know what? What do you [00:51:00] consider failure? You know, I mean, what, what, what was your kind of like a mistake or a business failure that you consider that, you know, you, if avoided, that would have been a better thing for your business.

Um, what did you learn from it? And what can other entrepreneurs learn from your mistakes?

David Smith of MattressdepotUSA: I would say mistakes is generally going to be people related, um, keeping people too long that you knew you shouldn’t have. Um, you know, I always kind of say that the hardest thing to do maybe is let somebody go. Um, you know, I’ve got empathy.

That’s a tough thing to do. Sometimes you get invested in people’s families and their lives. But they’re not able to do the job. And, you know, if they’re not able to do the job, then, you know, uh, I’m not doing them, you know, any favors by keeping them on because a lot of our job is commission based and if they can’t make, you know, certain sales attainments, they’re not really making that well of an income [00:52:00] and therefore, is this really the right career for them?

Um, so I would say that’s generally mistake. You know, number one is, you know, not probably, you know. Getting past that empathy and letting people go, uh, when, when, you know, it’s the right time versus trying to keep making it work out longer. For sure.

Sushant Misra of TrepTalks: Uh, now I’m going to move on to our rapid fire segment and this segment, I’m going to ask you a few quick questions and you have to answer them maybe in a couple of words or a sentence or so.

Uh, the first one is, uh, one book recommendation, uh, business book, uh, for entrepreneurs

David Smith of MattressdepotUSA: and why? Thank you. Thank you. So I don’t read a lot of business books. I read actually a lot of investing books and then I read a lot of health and wellness books. What I do get a lot of my business acumen from in the reading world is magazines, believe it or [00:53:00] not.

And so, you know, I, I mentioned earlier, you know, your, your local business journal. That is, that is a great, you know, source of business knowledge. It’s great for networking within your community. I think almost every size city has. I mean, I think they’re actually like a lot of them are owned by the same.

So always studying that and you know, business week was always one of my favorite magazines. It always had great information in there. Um, one of the things I did that I learned and, um, I had a competitor come knock on my door once. And he goes, um, will you buy my company? And he literally like walked up and goes, he goes, I need you to buy my company, take over my stores.

And we’d kind of been a little bit, you know, pretty tough competitors. And, um, he had, [00:54:00] I said, you know, we went out and after we’d kind of done the deal, I said, so why, you know, You, you could make this thing run, you know, obviously, yeah, it’s in decline, but you know, it’s salable. Why did you, you come to me?

And he said, man, you, you did something that was brilliant. That is when you did that, my business thing. And it was, um, one time I read in a business week about buying domains that are similar to your competitors. And brands spellings, but they’re misspelled. Um, and there’s a term for it and it’s, it’s slipped my mind now.

It’s. Um, you know, it’s like when somebody takes over somebody’s house and then they don’t leave, um, you know what the word I’m, but anyways, that was, they called that domain, whatever. And so I’d done that. I went out and bought like a hundred domains of [00:55:00] all my customers, every spelling possible, even the really big ones.

And just from, and it was just from an article I had read. I’m like, God, that’s a brilliant idea. It’s not that expensive to do. You know. I mean, mattress, everybody spells mattress with one T, but you know, the 800 pound gorilla doesn’t own their trade name domain in a domain form spelt with one T. So I did that.

And, um, you know, that was something I had learned from a business week article. And there’s been many more examples. Um, but that was one where again, you know, you pick these things up to me, magazines are a little bit easier to, uh, to read and get through on a weekend than a book.

Sushant Misra of TrepTalks: Okay. And, and you basically redirected that traffic to your site.

Is that what you said? Yes. Yes. That’s genius. Yeah. Yeah. Um, and innovative product or idea on the [00:56:00] current e commerce retail or tech landscape that you feel excited about?

David Smith of MattressdepotUSA: Well. In my industry or just any industry, any, any industry, or it could be yours.

I mean, I, I honestly think that health could be really, there’s a lot of different health service things through technology that I’m excited about because. You know, I’m kind of one of these, you know, as you, as you get older in age, you, you want to keep getting older and older, healthy and all that. And I think technology really has an ability to help all of us live longer, healthier, happier lives, but it’s, it’s going to take.

You know, somebody funneling this and putting it to, you know, properly so it, you know, everybody [00:57:00] can, you know, enjoy the possibilities of it, um, within my own industry. Uh, there’s a couple of new products that I’m excited about. Again, our, our industry is not too technologically changing. But they just, there’s a, there’s a massage mattress and I’m kind of excited to try out at the next market, um, you know, massage chairs are a pretty big industry in themselves.

You know, there’s never been a mattress that you lay on and it massages you and, you know, now you don’t need a chair. You just got the mattress. So we’ll see. I don’t know if it does a good job. Well, very

Sushant Misra of TrepTalks: interesting. Um, a business or productivity tool or software that you would recommend or a productivity tip.

Well,

David Smith of MattressdepotUSA: my, I mean, a simple one, but I mean, Dropbox to me was, you know, when that came along and we started using that right from the beginning, and I think it, you know, and I know there’s different forms of it, but to me, [00:58:00] Dropbox is an amazing tool. Uh, it, it works great. It’s, you know, it’s not expensive, um, and you know, with technology, the way it is.

Uh, it allows you and it’s on every app, your phone, whatever, um, you could access files anywhere with that in the cloud and really truly be accessible 24

Sushant Misra of TrepTalks: seven. Another startup or business in e commerce, retail or technology that you think is currently doing great things.

David Smith of MattressdepotUSA: Well, obviously AI has got a lot of legs, but it’s, it’s, it’s got availability in every business. And, um, so I think, uh, that is probably our next technology leap is how AI helps. I mean, just in my business could, you know, if I could have. The perfect [00:59:00] AI little software where customer can come in and answer some questions and it just, you know, it has that conversation with the customer to select the right mattress, uh, and do it better than a human could do it.

Right. Like, um, that, that doesn’t exist. Um, could it be created probably, but I don’t know if anybody’s going to invest the time and effort for the mattress industry for that AI, but. Um, I think AI has got a lot of, you know, I, I think of it in the medical field, you know, if all the medical data in the world were to go into some kind of a data computer, we could all self diagnose ourself instantaneously for diseases and ailments and, you know, again, live longer, happier, healthy lives.

Um, it’s. You know, why we live is to live longer, happier, healthier, right? If we can. So, um, any way AI can help in that venture, I think is just going to [01:00:00] be phenomenal.

Sushant Misra of TrepTalks: I think, I mean, I think that’s already happening. I mean, all of these AIs are kind of in progress. Even recently, I was, uh, I read a news where some, someone had an issue and they saw multiple doctors.

They couldn’t really provide a proper diagnosis and they put like on chat GPT, they put their symptoms and it kind of gave them the right diagnosis. So I think it’s, it’s, it’s, it’s definitely happening. Happening. Final question.

David Smith of MattressdepotUSA: And with us, we have a sleep software that works really good. And, um, we do sell a device that you stick underneath your mattress and it gives you a readout every morning of how you slept.

Uh, it gives you a score. Uh, it gives you your heartbeat. It gives you your breath rate. Uh, you know, now you think you take it to the next level, um, you know, it can start taking your blood pressures and stuff like that where you can maybe catch stuff earlier and you can see trends and, you know, correct.

Uh, [01:01:00] so we can sleep better, but, um, yeah, it’s, it’s, it’s going to be, it’s going to be amazing, exciting. It’s an exciting time to be living in, in seeing this come to fruition, um, and, and see where it goes.

Sushant Misra of TrepTalks: A peer entrepreneur or business person whom you look up to or someone who inspires you?

Well,

David Smith of MattressdepotUSA: um, you know, my entrepreneurship came from, you know, two people, my dad and my, uh, uncle. Um, so I would say they both inspired me and I think they’re where I get a lot of my traits from, uh, as, as an entrepreneur, but when it comes to obviously, uh, more well known personalities, I would have to say Elon Musk in, in my book, um, you know, just is an amazing genius, right?

Like, and just, I think that, you know, to [01:02:00] obviously inspire to be like him and, you know, I’m not near, I wish I could be as 10th as smart as him or 100th, whatever it is. And he works hard, like, I mean, the guy sleeps in his office, I mean, he does everything that, you know, as an entrepreneur, you look at and go, yeah, he’s, you know, he’s doing it all TEDx what most entrepreneurs even think is.

Yeah,

Sushant Misra of TrepTalks: yeah, for sure. Final question, best business advice that you ever received or you would give to other entrepreneurs? Best

David Smith of MattressdepotUSA: business advice, don’t do a partnership.

Partnership, yeah. Um, yeah, I, you know, I think the best business advice is always come down to ownerships. And in the beginning, you know, uh, ownership’s [01:03:00] important and, you know, make sure that, you know, if you have partners, you know, it’s going to work out well in the long run, have everything predetermined plan the best you can.

I mean, uh, you know, I’m not saying obviously don’t do partnerships and, you know, don’t sell stocks and stuff like that, but I think. um, Plan it from the beginning, um, properly and take the time to do that, right. Cause I think that’s important. It sets up the long term path and runway. And, um, you know, it’s, you know, last thing you want to be when you start getting to be successful.

Is to worry about. How’s our ownership and who’s got to say, and what are we doing next? Um, you want to keep just focusing on growing. And, you know, Staying on the path to success.

Sushant Misra of TrepTalks: Yeah, that’s that’s such a great advice. I think any kind of partnership relationship. Um, it’s, um. It can be [01:04:00] challenging or, you know, sometimes it, you know, if things work out, then they’re, they’re great.

So definitely a great advice there. Well, David, those were all the questions I had. I know we went a little bit over time, so really, really appreciate the, your extra time. And thank you so much for, for the opportunity, for sharing your story, sharing about the mattress industry and, and how you have grown your business.

So. Thank you again for the opportunity. If anybody wants to check out your products, uh, what is the best way to do that? We’ll go to our

David Smith of MattressdepotUSA: website, uh, mattressdepousa. com. And again, if you want to see some of the fun commercials, go to our YouTube channel, just type in mattressdepousa and subscribe to our YouTube channel.

Sushant Misra of TrepTalks: Awesome. We’ll definitely do. Well, thank you, David. Again, really appreciate it and wish you all the very best in your business.

David Smith of MattressdepotUSA: Thank you. Take care.