Ep. 13: INTERVIEW - Rich Fulop on Building Brooklinen, the Internet’s Favorite Sheets

 
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Rich Fulup on Building Brooklinen | Idea to Startup Episode 13 transcript powered by Sonix—the best audio to text transcription service

Rich Fulup on Building Brooklinen | Idea to Startup Episode 13 was automatically transcribed by Sonix with the latest audio-to-text algorithms. This transcript may contain errors. Sonix is the best way to convert your audio to text in 2019.

Brian Scordato:
Hello, I'm Brian Scordato and this is the Idea to Startup podcast brought to you by Tacklebox, the accelerator program for founders with full time jobs. Today we've got an awesome interview I have been super excited to release ever since we recorded it. We've got Rich Fulup co-founder of Brooklinen talking about how Brooklinen came to be. This is an amazing story and it also holds a ton of technical knowledge that will be helpful for you and your startup. We talk through everything from early ideation to how he tested and built early on to how they were able to grow before V.C. funds were interested to supply chain, to branding and design. And finally, kind of tying it all back to see how you can do it with your startup.

Brian Scordato:
I had a blast chatting with Rich. He's incredibly inspirational and it shows how a bias towards action, coupled with a thoughtful approach and clear messaging can do wonders. As a side note, I am a customer of Brooklinen and I cannot recommend them highly enough. This has nothing to do with the podcast, I wasn't asked to do this, but it is true. I just got the super plush towels and they're amazing. I love using them whenever Ruby hasn't stolen them when I'm in the shower and taking them to the back of her crate. This is, I guess, a free slogan for Brooklinen if they want to take it "Towels so good that Brian's dog Ruby steals them more than any other item in the apartment". Anyway, here's Rich. I hope you enjoy and have a great week.

Brian Scordato:
So Rich, poor people who don't know, tell me a little bit about Brooklinen and how you guys got started.

Rich Fulup:
Sure. Thanks, Brian. So my name is Rich, co-founder and CEO of Brooklinen. We're an online, digitally native home goods company. We started off with just bedding to start, but now we do a lot more than that, branched out into a lot of different categories to really cover what we call "comfort in your home 360 degrees".

Brian Scordato:
Awesome. So as background, a lot of our listeners are early stage founders, early stage entrepreneurs. So it seems incredibly daunting to me to build this type of company. And I'm really interested in sort of the origin story about where the idea came from and how you were able to take those first steps.

Rich Fulup:
Sure. Yeah. Our start is a little untraditional. This is a business that was bootstrapped for two and a half years and we were fortunate to execute very, very well in the early days, which allowed us to get some pretty decent scale while bootstrapping before we raised any money. But the beginning days were were challenging and proving the concept, getting some belief and customers and the investor community, everything it was, was really challenging.

Rich Fulup:
The idea started in 2000, late 2012, early 2013. My wife and I actually went on a vacation and I was in business school at the time. She was working at a PR agency. We got away for vacation. We actually checked into the hotel, put our stuff down and we sat on the bed because we were exhausted from travel and we felt the sheets like kind of randomly. And we both kind of had this moment like, oh, my God, the sheets are so nice. It was very, very strange. We never had a conversation before specifically about that product.

Rich Fulup:
So the hotel we staying and actually sold all the products in the room. So the chairs, the rugs, the bed frame, the night table and the sheets of course. When we get to the store at the hotel to try and buy them and bring them home, the core sheet set was 450 dollars. Duvet cover was another 450 dollars, pillow cases where 150 dollars or so. So a thousand dollars for that sheet set. And I think it's important that I said I was a student at the time. So we weren't, that wasn't exactly, that didn't exactly fit into our budget at the time.

Rich Fulup:
So really what happened was, I tried to figure out a way and I can I tend to go on these like Internet deep dives when I get hooked on something. So I was uh, I found myself in like years old threads and forums, you know, in the deep underworld of the Internet, people actually talking about the same thing. And there was a quite a community down there of people that were like, where can I get that? There's so good. Who makes them? What's it made of? Like, there's so many questions and not a lot of answers. There was no one like moderating a forum on that on Reddit and elsewhere.

Rich Fulup:
And then actually that kind of, I had a light bulb going in my head that there is demand out there for sure. I can't quantify right now, but I'm not crazy, really. There's a lot of other people out there. So, I really tried to figure out what they were and who made them all those questions and see if I can back channel my way to get a set for myself. It wasn't really like, oh, I'm going to start this business. It's going to be like, how do I just get the sheets at a discount price was really like the original goal.

Rich Fulup:
And then we started to see factors that factors that contributed to our idea to actually make this a business. We didn't end up buying them for a thousand dollars and I couldn't find who made those specific sheets. But when we came back to New York, we were then in market to buy and we found ourselves at a big box store or department store or really like a high end boutique home goods store. And none of those really fit with how we shop or our aesthetic or our price point. Just didn't really jive or fit.

Rich Fulup:
Is it the bad buying experience of the big box - you have fluorescent lights, zipper bags, colors, no information, no reviews, no product knowledge, no details. You have a lot of clutter in the department stores. Similar, but, you know, maybe a little better merchandising. And then you got the high end stores that were, you know, predominately uptown. That was very expensive. And there was nothing that was a cool brand, at the right price, with the right value propositions that was really like speaking to us, the customer, which is when we really were like, "we should make this".

Rich Fulup:
And it was early days for direct to consumer brands in 2013 there weren't many out there. You're talking about like Warby Parker or Bonobos, really. And both of those had only the original plastic frames or ninety-five dollars and Bonobos was really only like flex at that point and have like their whole ensemble. Both of them. So it was one product, we do it great, we do it better, we cut out the middleman and just give amazing value to the customer. And we thought there was room in bedding to start, but really the whole bedroom and then the whole home really because there's branding and furniture, hard goods, but the soft goods is really fragmented.

Brian Scordato:
Interesting. So you saw the use case definitely in the bedroom then from early days thinking like pretty big scale.

Rich Fulup:
Yeah. I mean. Yes and no. Of course, we're thinking big scale. If we want to make the business as big as possible, we didn't know how big it can be. We didn't know how big the audience was. We also didn't know how big the product mix would be because we knew what we wanted the sheet, we were optimizing towards what we wanted the sheets to feel like and we knew we wanted it to be crisp and cool and lightweight and not suffocating and soft cotton and no, no synthetics, no polyester, anything in there. So we knew all these attributes that we had to engineer to get the product to be exactly that and then communicate it to the customer. And we thought maybe it was the silver bullet of one product that's amazing and that's it. That's the hero product for us.

Rich Fulup:
But really, that opened the door to people really like the brand and the value proposition and the product. But then they wanted more. So as we built their relationship with customers, they're like, you know, we love your sheets. You know, where I get equally as good pillows. Where can I get equally good blankets? Where can I get comforters? What detergent should I use? And with all these questions that are worth fielding, they really all just presented opportunities for us to further service the customers because we want to be their go-to choice for this stuff. So it's really about listening closely and just being able to satisfy them.

Brian Scordato:
I love that and I want to dig into that a little bit in terms of vertical versus horizontal growth early on. But let's, let's backtrack because I think a lot of our founders will have a similar-ish insight to you where it's like I know what the product needs to be for it to be successful, but they have no experience making a product. And so that first step is really daunting. So how...one, did you have any experience making physical products or supply chain and two, how did you go about exploring that?

Rich Fulup:
My wife and I had zero experience in this. Not even close. We came from very, very different fields. I was in business school when we launched the company. I worked in sports for the few years before that and then in finance for five, six years prior to that. She went to law school and then worked in public relations. So she really had no experience either about it. But now we're both like to think we have good taste and we are early adopters of brands and trends and we kind of can see through the clutter. And we're very, we have a lot of synergy in that between the two of us. We think alike. So we had to get smart on the topic to figure out how to make it.

Rich Fulup:
The first thing we did was honestly go to Barnes and Noble and get a stack of textile books and really understand how things are woven and what makes a fabric feel like the way it does, because you have so many different shirts or pants or anything and they're all fabric, some sort, probably a lot of cotton, but they all feel unique and different. And the question is why?

Rich Fulup:
And we had to get smart so we can communicate with factories and manufacturers and say, here's what we want, X Y & Z. And that made the conversation...A, that made and take us more seriously and B, we had less exposure to get scammed or anything, we had more product knowledge and we just sounded smarter. We did that, which is important in the early days. So it's really about getting smart on the space and then having conviction that, you know, this is going to work. This is what the market needs and we're gonna make it happen one way or another.

Brian Scordato:
So you, so it sounds like you've figured out what the initial product needed to be and feel like. Then there's still a big gap between that and releasing a product and then building a company. So what were you thinking next once you had a sense of what the product needed to be?

Rich Fulup:
Yeah. We don't really. We we took it step by step. We didn't really want. We weren't thinking too far ahead. We were thinking like small goals. And I think it's really important. So you have check points, milestones, just to make sure that you're moving in the right direction. If you're, if you're thinking about a billion dollars from the get go, there's so much that happens in between, you know, Phase 1 and that, that like you might not even get there. You're just way ahead of your skis at that point.

Rich Fulup:
So, you know, the first one for us was actually getting the product and finding a manufacturer. So we got on planes. We've made calls. We sent emails. We're really just talking to factories all over the world to figure out who makes what. What are the value proposition? What are the costs? We also did a lot of customer surveying. So we went around to stores, to coffee shops, to on the street just to talk to people and ask them a few quick questions. You know, do shop online? Where do you buy your home goods?

Rich Fulup:
There was a series of questions that probably took, you know, one minute, but it was just trying to position to see if there was appetite for it. How much are you spending on your home goods? Do you care what brands? Like these things. And we kept hearing like, I don't know, I love this, but I don't know where to find it. Here, here's how much I pay. And then they're all really all informed us of how we need to position our product on that.

Rich Fulup:
And then with that, we had the product. And then it's not really about like if you build it, they will come like the Field of Dreams. It's like you have to do a lot of hard work to get in front of people. So what we did first the vehicle that we used as Kickstarter in 2014 and there weren't a lot of these direct to consumer products on Kickstarter at the time. So what we did was we put a goal up of 50 thousand dollars, no marketing, we didn't know how to do digital marketing either, we didn't know to to manufacturer, we didn't know how to do marketing. We don't know anything at that point. We just knew what we wanted to make.

Rich Fulup:
And yeah, we ended up blowing out our goal of fifty thousand dollar goal to a quarter million dollars of sales in the first 30 days and really then we were off to the races because you get that money, minus Kickstarter's commission cut and then that actually funds the first purchase order, which then the wheels are turning and then to fulfill for the customers and get all the size details and all that stuff. And then after that, it's just about keeping momentum and treating your customers great. Your early adopters, these are like the most important people.

Rich Fulup:
I believe, this was five years ago. It was one thousand seven hundred and three people that backed us. And those were the most important people, really to take care of them and have them talk about us. And really, our mentality was if we can get all these people to refer one person, the business doubles in size and then we can just do it again and again, again the right way and we didn't spend any money on marketing. We sent samples to media just with handwritten notes that said, hey, here's what we're doing. Here's the idea. It would be great if you wrote about us and, you know, really showed your audience, you know, what we're trying to do and say I think would be a good fit. And it worked really, really well. We got a lot of coverage.

Brian Scordato:
So do you think a lot of those customers came from the press or where did those customers come from?

Rich Fulup:
Press I would say it was huge. Kickstarter community, friends and family like we were, we got to be humble, so I was on Facebook and LinkedIn. Not sure, Instagram was a thing. I'd go on Facebook, you know, just sending to all my friends and my personal audience and what I was saying, like, "Here is what we're doing. We would appreciate so much if you can share this". Because when you get someone to share than a share for their community. And then if you do the same thing and you ask them to say, hey, my friends, doing this and give people the motivation and people just really need to be asked, it doesn't hurt to ask. And then as you do that, the network grows and then people helped us to get the word out.

Rich Fulup:
So that combined with press, because the press we got was very untraditional. We didn't go to like home decor, magazines or blogs or anything. And what we did was we went to surprise and some business ones. We went to GQ, Vogue to Fast Company, Forbes, like really where you would think like people aren't expecting to read about this idea, but like they could be a customer and maybe something goes off like, "oh, this sounds good, I can use that" was really are our tactic. So we actually targeted more of those untraditional not home goods verticals.

Brian Scordato:
That's clever. Where did that idea come from?

Rich Fulup:
My wife Vicki. She's she's really, really good at PR and press and that was like her tactic, really. She worked in a totally different space. She worked in beauty PR, but she knew how to speak to editors and she knew how how it works to communicate with them and get coverage. And you know what the ins and outs were. So she knew who we needed to get in front of that point. We didn't have connections. It was really just about the tactics.

Brian Scordato:
Great. I have two questions before we move forward from there. So first, you mentioned that you were speaking with people and you mentioned like coffee shops and other places. I'm just curious about the logistics of that, like, were you literally walking up to strangers and asking them or how does that?

Rich Fulup:
Yeah, we would see i twas better when people were alone, you know, if they had uh, so you're not interrupting anything. So they're alone, they have headphones in or something and they they're doing little work or reading or whatever they're doing at the coffee shop. And I was in school again. It's important to say I was in school. So if I go up to somebody and say, hey, I'm working on a school project, which I was because I did use this as a case pretty much in all my classes, I was working on it while I was in school. I went to school from 2012 - 2014. So over the course of it, whether it was marketing, supply chain, operations, pricing strategies, this was my project. I used in a lot of classes.

Rich Fulup:
So I would go up to people and say, hey, you know, "I'm working on a class project. I go to NYU. Can you help me with a 30 second survey?". So people are willing to help. Generally, people are nice if you're nice to them and humble, then they're willing to help. So I'd ask them rapid fire a few questions and just try and get some data to really inform all the stuff I was working on and such.

Brian Scordato:
I love that. Next question is a little bit of a different path. So you and your wife were working on this. Now Kickstarter hits. It's like a very real thing. How are you emotionally? Like, how is how are you guys thinking about this? Is this, like, daunting? Are you worried about stuff, you know, husband and wife working on the same thing. Eggs in a risky basket. I'm curious how you guys were thinking about it.

Rich Fulup:
Yeah, and it's super risky. I mean, I just got an MBA from a top 10 school and I was interviewing for all kinds of jobs that were as a hedge on this just in case we didn't hear Kickstarter goal. Consulting firms and really high paying jobs. So I knew if I would if I went down this road, if it was successful, the upside would be huge. But the short-term implications would be very challenging. I would not be able to draw a salary for a little bit. And then when I would, it would be lower than when I started business school because I had to reinvest everything in the business.

Rich Fulup:
Same with my wife. She has a law degree and she a eight year career at that point. So we were taking. We used our savings to put into the business and to live on. We also set goals for ourselves. So this was May 2014. So we really set like milestones for us. This is where we need to be by Christmas. This is where we need to be by a year from now. And then if we weren't there, then maybe there was no future and maybe we should fold the cards and move on to something else. We ended up blowing past these goals, thankfully, but it was important to set those goals to keep us in check.

Rich Fulup:
And then one more question on how prepared you were prior to Kickstarter. So this is something that people worry about a lot, like how...did you have all of your ducks in a row before you want something like this? That might be a validation step. Or were you ready for this type of reaction?

Rich Fulup:
Yeah. I was as I said, I used this as a case in a lot of my school classes. So I took a lot of entrepreneurship classes and things that were really, really important were how to set up a company and how important that is from the get go. So we had all the legal paperwork, corporate like the incorporation stuff really setup from the get go. So that was taken care of before, we had a bank account set up. All, all the stuff that was really critical that I think a lot. It was really, really important that we did, because I think a lot of people like you can kick the can down the road and we'll deal with that later when it becomes more serious. And that's too late. You need to do that stuff like ahead of time. And, you know, we did it online. It was not that expensive, but it was important to get it done. And important to note that we did it wrong also because we did it unlike one of those really cheap sites. But it was done.

Rich Fulup:
So we were able after the Kickstarter, we were able to actually like do it properly with a law firm here in New York. But we did have all the documents set up in advance in terms of ownership and stock and everything that you need for the structure, which is really important on the road. That can't be overlooked because things get serious really, really fast. And we were really excited about where we were, like it was way beyond what we thought it would be. That was a lot of orders. And we didn't have a process. We ended up packing the orders by ourselves. You know, along with task rabbits, we'd hire by the hour to help build boxes and pack the orders with us, because we have a warehouse or procedure on that. So it was just really like figuring stuff out on the fly.

Brian Scordato:
Yeah. That's what I want to jump into you next. So you have this great response from customers and now you've got to figure out all the logistics of this company. What'd that look like?

Rich Fulup:
Ah man, it was it was exciting and it was a nightmare at the same time, like really both like hand-in-hand. There's a few things that really jump out in terms of like moments where it was really real and really challenging and stuff. I really had no idea how to how to import goods from overseas. It's like, how does it get packed in a container? How does the container get on a ship? How do you get it off the ship? How do you get it on a truck? How do you get it to a location? How do you pack it? How do you get it to UPS.? You have set up a UPS corporate account to pick up in bulk. And like all these questions that they seem pretty basic, but they're so important, like you can't operate without it. It's impossible.

Rich Fulup:
So we leaned on some of our suppliers for help with how to get it over here first. And at that point, then it was everything I could have went wrong, went wrong, no doubt about it. So I remember specifically over the course of the summer of 2014, we're communicating with our customers. And we we always still to this day, we like to over communicate with them. It's really important that we can feel like they're in the loop and we do updates on production, pictures of us in the factory and the packaging, like this to show that it's real and it's coming along and we're on schedule. And then as that kept happening, like we got closer and closer and closer, there's always obstacles and delays and challenges.

Rich Fulup:
I remember we sent out an email that was you know, it's arriving to New York this week. We should have packaged them next week. And we're so excited about that. And then, lo and behold, it was our first import, we're a new company, you know, bringing thousands of units for the first time. It was suspicious, I guess, to governments, so they seized our container. U.S. Customs and Border Control, and they ripped it apart and inspected everything. And they held it for an indefinite amount of time. And this is the last thing I needed.Right, I was like a come on. I'm, like, so harmless here. I'm just trying to make my Kickstarter work.

Rich Fulup:
And, you know, there's no information. There's no one to contact. You get a template email that says like, "here's what's happening, we'll get back to you when we're done". Yes. Actually, I rented a zip car and I got in the car and I drove down to the docks in Elizabeth, New Jersey where the stuff came in and it was, you know, I'm there with thousands of containers in the shipyard trying to find out what's going on. And there's a little office in the corner. And I'm there and I'm like, begging them to talk to somebody. I'm calling senators and councilmen. I really am calling everybody in New Jersey to like I got to get this thing released to get this up because my my future is on the line here. And it was just so stressful.

Rich Fulup:
We eventually, like we ended up getting in touch with the right person, getting it released in a few days later. And then it was just like a series of unfortunate events. After that, you know, it comes and then we had trouble coordinating with the trucker and the trucker picks it up and there is complications. Then it's the wrong truck. So they come, we're in Greenpoint, Brooklyn. They pull up on Greenpoint Avenue, which is like a two lane like neighborhood street. And we have this tractor trailer. There's no loading dock at all like our temporary office. So we can't get the goods off there. And there's thousands of boxes.

Rich Fulup:
So change of plans, so we go to look down the street to this moving company that was there. And we're like, we need movers right now. How many guys do you have? So we have an army of movers in Greenpoint coming in of like 10 guys on the spot it was raining also that day. And there we're all climbing. It is 10 guys. And then I'm there with them and we're climbing into the container and we're breaking apart these pallets and bringing individual boxes. And then we're just filling up this room that's about a thousand square feet. And we have like. Twenty two pallets at the time plus our like little office space or they like the room was packed to the ceiling, into the walls with no system set up to know where, what is and organize it.

Rich Fulup:
It was it was just like we were so unprepared for how complicated, overwhelming and got really real at that moment. And that's really the challenge is like, wow, this is real. And we need systems here like accounting systems and inventory management systems. We need like systems physically to like nowhere stuff is and how to pick and pack it. And we're just figured it out on the fly. But it was just a complication after complication like FedEx vs. UPS versus the mail. What can we send internationally? We sent stuff out internationally. It got returned to us because we didn't do the proper paperwork, because we didn't know the paperwork to do so. It was you know, we had a fair amount of international customers amongst those first 17 hundred. And it was just one thing after the other. And you just got to weather the storm battle through and figure it out as fast as you can, really.

Brian Scordato:
So you mentioned earlier that a lot of your customers would then ask you questions about like you gave them sheets. They were great them and said, where do I get this where do I get that. There's a tension there. It sounds like the initial expectations for Kickstarter, like things must have been a little bit late. How were you able to keep those customers so loyal and excited about Brooklinen?

Rich Fulup:
Communication? Honestly, that's that's the most key thing. People want to be in the loop. They want to feel like they're part of the process. These people were the key to getting the business off the ground. And we completely acknowledge that. And we're very appreciative of the support we got. And we communicated that and we made it feel like they were part of the process. So we showed them prototypes. We asked them for their opinion on patterns and colors and fabrics and ideas. And we just really over communicated, like here's where the production is. Here's where it is now. It's coming next week. What's your feedback? And really just including them.

Rich Fulup:
And that really made them feel like they're part of the founding team as well. I think it's really, really important because then it's not just us. It's all these people that are you know, everybody wants to be the person that brings the good idea of their friends or family. So you've got to try this, right. They found first and like for those seventeen hundred people, they were and they know we incentivize them to, you know, referral bonus and buy more. Yeah. It was really just about treating people well.

Brian Scordato:
Amazing. So when you're coming out with this initial product, it's it's sort of, it's obviously a product that exists and everyone's bought before, but you're selling it in a very different way. So how do you think about pricing?

Rich Fulup:
That's a complicated one. So we knew, first we approach it from the customer angle. So what is our target or ideal customer like the right down the middle customer? What are they willing to spend if it's too expensive? It wouldn't be suitable for that customer. It was too cheap. Then they also it wouldn't be good enough of a product. So we had to get that right. So we talked to the customer in those interviews and what what they were looking to pay. And we tried to optimize towards that. Then when you think about the unit economics of the business, you know how much margin you need to make on any order. So whatever that nets out to that math is the maximum we could pay for the product.

Rich Fulup:
And then when we went to all these factories all over the world, it was here's our budget per unit. What is the best product we can get at that budget? And that's the way we approached it. Now, our pricing was way off at that point. So Kickstarter, those customers got a steal really. Because we didn't really understand a lot of the contribution costs that come into it in terms of shipping and logistics and freight and everything that goes into it. So I'm just thinking about the cotton and sheet set and then the final cost, but there's so much in between. So we just had to learn and adjust.

Rich Fulup:
And I think if you're transparent with people, so we've raised our prices over the last few years, but we always communicated. We always say, hey, customers, I'm paraphrasing, we we say in typically all text, will say a note from me that I actually personally write that says we are raising our prices and here is why. I mean, cotton is a commodity. It fluctuates in price. Also, our costs raise. Our team is way bigger, our operation is way bigger and things get more complicated. So we need to marginally raise the prices. And if you have justification, you communicate in advance that people don't get angry. Really, they appreciate the transparency.

Brian Scordato:
Another thing I think our founders are worried about is when you launch something and there are competitors in the space that are theoretically much bigger than you, you're like, oh, well, I would do X, Y, Z, but then I feel like I would just get squashed by "name big company". How do you think about that early on? And obviously you have not been squashed. So how...yeah, I guess what was your thought process around that?

Rich Fulup:
Yeah, I mean it's important to say, you know, who our competition is and we are we defined that from the very early days. There are companies that have mimicked our business or tried to replicate our products, but that's not really who our competition is. Our competition are the incumbents that have most the market share. Those are big box stores and that's the department stores of the world. That's where the customers are predisposed to purchasing these products. So what we had it, our advantage was direct to consumer relationships from the manufacturer, us and straight to the distributor, us on the website and the customer and the customer service was us. So we can get this feedback loop really, really tight to have really, really good product market fit.

Where the entire process for a department store to serve up this product is really long and complicated and expensive, and the person making the product is not the person getting the feedback on the product. There's many middlemen when you have wholesalers and distributors and retailers and then going all out the supply chain, that it's hard to iterate on that and to really get it right and service the customer. So because we are so small and agile is actually an advantage. We are able to kind of cruise under the radar.

Rich Fulup:
And actually, you know, we were doing well and we are doing well. But the reality is we haven't put it, we've barely put a dent in what this market is in the world or in the United States just because, yes, we sell products that every single person more or less has in some way, shape or form in their house, whether it's a pillow, whether it's sheets, whether it's towels, whatever it is. So the market opportunity is there and just about getting the right message and getting in front of people with the right messaging.

Brian Scordato:
So you mentioned fundraising earlier. I imagine that you might have had the opportunity to to fundraise. Certainly thought about fundraising at this point after the Kickstarter. Curious how that went and how you think about it in general?

Rich Fulup:
Yeah. We really wanted to and we needed to because it's expensive to run a business with physical goods. You have to buy a lot of goods. You have to store them in the fulfillment. We weren't marketing at this point, but when you start marketing, it's really expensive. And then a team, of course, at this point it was just Vicki and I. But we needed support. We needed help. We need a team and we have to pay them. And if we want good talent, you have to pay them what they're worth at that point.

Rich Fulup:
So we had to raise money, but we couldn't. I met almost every VC investor I think in York City in 2014 and 2015, and I was so pumped about the proof of concept. A quarter million dollars in one month. And then we launched our website in October of 2014 with just Brooklinen.com, not Kickstarter and we sold out. We had a waitlist after the Kickstarter of twenty five hundred people and we sold out in less than a week, maybe four days or so. Like bone dry, all of our inventory, which is great. So that was all the inventory we can afford.

Rich Fulup:
And I thought we had a really good proof of concept, but just every single investor shot it down, one after the next. Like this is not exciting. How big a business could this be? I got to see more. You know, it's a standard feedback. Like nobody actually tells you no. Like yeah, I want to see a little bit more, but like when is it enough is really what you keep asking yourself, you know? And it kind of. I'll be honest. It put a chip on my shoulder at that point because I thought we'd done really, really well. You know, based off with no funding, with no anything, no resources, we've really I thought we prove the concept.

Rich Fulup:
But yeah, nobody believed in it except us for a long time. And then we just got momentum. We figured out on our own. We worked with our suppliers. We worked with banks also to get loans or, you know, ever we needed to do find alternative ways to fund. We had a few angels that invested. I don't know, like twenty five thousand dollars each. I mean, I a huge, huge money here. But people that believed in us and that was a really, really important. And they really made intros to other VCs that still wouldn't invest and then really took until we finished 2016 where we grew from two million in 2015 to 20 million just us in 2016 for people to take notice.

Rich Fulup:
And then we had some options at that point. So in Q1 2017, we had a few options from investors that were interested at that point and that was great. Now we have a higher valuation because we have so much revenue. So we have all the equity we have, we can really charter on the course and then it was about who's the best fit? So we ended up raising money from First Mark Capital here in New York. And they're great. The portfolio is great. Team was great. The platform is great. Everything was really, really good fit for us. So I made a lot of sense and they've been in a really good partner for us.

Brian Scordato:
What's your advice to founders to try and raise funding for, say, two, three, four months? And it's not working out. When is it time to stop and try and figure out stuff on your own? And when is it just not a fundable business? What do you think about that?

Rich Fulup:
I think two, three, four months is way too short. I think I think it easily takes more time than that for. For us, in that two years, I was really pounding the pavement and I was still networking. I was I was trying to meet everybody and anybody I could really because it's hard to run it on a knife edge with without much funding, much cash in the bank. There were times when we had no money in the bank, few thousand bucks and we had always customer all this revenue. We had a few thousand dollars to make it work and hope that things worked out.

Rich Fulup:
This is common, honestly. You know, Nike was made the same way. Walmart was made the same like it really it's a common struggle and I think it's really, really healthy. I actually think the best companies in the world have went through that. And I don't think the best companies in the world got all kinds of funding from day one and just blasted through money. Raised more money and then blasted through money. I don't think that's the best way to make it work, honestly.

Rich Fulup:
So you learn in those early days when you have no money. Like every single penny counts and you know how to be really in control and be really responsible. And then it's really served us well, because in the grand scheme of things, we haven't raised that much money. We've only raised that one round two and a half years ago. At this point, and we've the business is wildly successful on the heels of that just because we were trained ourselves for two and a half years to be really careful.

Brian Scordato:
How are you thinking about prioritization in those early days in terms of like what you vs. Vicki did and any early team?

Rich Fulup:
Yeah, important to have a division of responsibilities between the founders that's so critical. I would encourage every founder and founding team like the most important thing is to have that full conversation from the get go. Here's what you're responsible for and accountable for. And here's what I'll be accountable for. And they're different. They're separate. They're complementary. And we both know what our responsibilities are. We aren't co-CEOs. We don't have any overlapping responsibility as a company.

Rich Fulup:
So we complement each other. I do my thing. She does her thing, and we work. And then I respect her decisions in her lanes. And she respects my decisions in my lanes. And we have authority in our respective lanes on that. So I think it's really, really important. You don't get stuck with differences of opinion. You trust each other and you're both in both your verticals or both or however many you are on your team. And that's really, really critical. And if you don't have that trust to let them execute then they probably shouldn't be on your team. It's probably not a good fit honestly. So that's probably a good gut check to you if you have the right co-founders.

Brian Scordato:
And would you recommend, this is a tough, tough question. But would you recommend someone starting a company with their significant other?

Rich Fulup:
Definitely. Yeah. We had feedback also in the early days about, you know, about that from VCs, investors, about, you know, husband, wife, team. I actually I don't understand...so I understand what the concern might be in some some regards. But I also think like on the other end of the spectrum, it's way positive, like we have so much trust in each other. I know that she is not going to screw me over. I'm not going to screw her over. We have a common goal and we're like attached the hip here. And we are so invested in it and we really care.

Rich Fulup:
Nobody's gonna check out. We're both checking, know we're both accountable for each other as well, for the business. So I think it's actually really, really important thing to have that trust so you can lean on each other. I think it's a positive honestly. If I, if I was an investor, I would look at that. I would I would ask tough questions, but I also look at it as positive.

Brian Scordato:
Our founders come through Tacklebox, we've had probably five or six husband and wife teams and they've drastically outperformed. I've always thought that was really interesting.

Rich Fulup:
There's a lot of skepticism, but I would agree with that. I totally believe that for the reasons that I just said.

Brian Scordato:
Cool so you start to grow and you prior to raising money. So I believe in essentialism where like 99 percent of stuff that you do doesn't really matter and everyone sort of does it and 1 percent really drives the outcome. Are there any fundamentals that you think are in the 1 percent bucket, things that just drove enormous value?

Rich Fulup:
I think just being so customer centric with everything you do, you have to be thinking about what does the customer want? Take their feedback seriously and just really keep iterating and optimizing. And sometimes that's against your instincts. But at the end of the day, it's what matters like what matters is what the customer demands and what they want. And you being able to service them because if you can't, someone else will meet their needs and then you're irrelevant at that point. You have to listen really closely.

Rich Fulup:
You also need to give them what they don't know about. So it's a little bit of a push pull on that. So, you know, Steve Jobs said, look, customers don't really know what they want. So we have to give it to them. I'm paraphrasing. He has a quote that says something along those lines that they don't know it until we show it to them, which I think is really important because no one was clamoring for our business. But once we showed it to them, people are like, oh, yeah, that's really great. I could really use that. I really want and desire that products. If you have to really listen closely. All the other stuff that you do, fundraising, banking, recruiting like that stuff is the 99 percent that every company does. But I think the best companies really lean into their customers and build a strong relationship.

Brian Scordato:
An awesome answer. So when you're deciding what next products to build, how do you think through that? So you started with sheets. What were the next products you made and where did that come from?

Rich Fulup:
For the first two years or so, it was just more sheets. So it was a few different fabrics, a few rotating colors, new patterns. I did some collaborations like it was just more and more about that. And we really want to establish our expertise. And I do think that taking a page out of those other early DTC company books that I've mentioned before, it was Bonobos or Warby Parker, you need a hero product that people know you for, like something that you can hang your hat on, that that is the company that does this. And that's the Nike's of the world did it with running shoes Right? Like long before they made basketball shorts or anything else. It was running shoes that were better, proposition to the customer and I think you need that hero product no matter what, you need to stay focused.

Rich Fulup:
So for us, it was just go deeper and deeper and deeper, not wider. It took us a long time. We wanted to mine everything. We still do have this mentality. We have to go as deep as we can still on the betting and we still are. We have we're always testing new products, new fabric, really just new designs like everything that we can think of because we want to go deep and be known as the best betting company in the world. Now, with that and people come to us and we build a relationship and we open the door to show them everything else we can do. But that's what they're coming to us. That's also super important. That was feedback from investors also, which was correct. It's not that we were doing something wrong at the time we were on the right track. But I heard this also that stay focused, stay narrow. And you really know what your strengths are and go hard on that.

Brian Scordato:
Yeah, I think you've done such a good job. I've bought various products from you over the last couple of years. And I remember first one, the kickstarter came on and really spoke to me. I remember being like, wow, this is very different. I was a kick starter nerd, all that stuff. But I thought you you've done such a good job of vertical growth. And we've had a couple of companies on that haven't raised money, period, or haven't raised money for a while. It seems like they do a really good job of vertical growth to create a relationship with that customer, continue to sell to them, whereas companies that raised early try and grow horizontally across different customer segments and our kind of shallow. That's just an observation of a thing I think you guys have done well

Rich Fulup:
Yeah, I agree. I'm not in favor of the wide and shallow. I think you go narrow and deep and then you build a stronger relationship and a stronger brand to do that.

Brian Scordato:
Cool. Two more final questions. Second to last one, is there anything that really wasted your guys time over the last couple of years, something that you thought might be good but wasn't?

Rich Fulup:
I don't think so. Obviously, I think everything you should look at, everything you do with regards to the business is to be educational, even if it's a failure. So all of those investor conversations that I had, like they sucked for two years. And to get rejected and rejected and rejected, it's hard and it makes you lose belief sometimes. But you need to keep that and hang onto that and really push forward. But everyone has a different opinion. And all, every single one of those investors, with the exception of First Mark and the couple, the others that made us offers around the same time were wrong. And I'm proud to say that that we proved them wrong.

Rich Fulup:
But their feedback was all very educational. You know. You know how to service the customer, what we should be doing. Everyone has an opinion using it to listen and filter. I don't think there anything that was a waste of time. I did, even though I spent two years trying to raise money and didn't raise any in that time until the end. I think every single one of those conversations was important that I had and I learned something. And same thing. I did customer service for the company for the first year and a half myself. And I was able to get feedback from the customers and that's like a huge time suck. I did that for many hours a day, but I learned so much from what the pain points were and really able to address them. So I have no regrets for anything as a waste time. I think you have to just look at it as like everything I'm doing is valuable and contributing.

Brian Scordato:
Wow. Another great answer. And then the last one, which we've asked everyone, which is more about your approach. So if you were going to start a taco truck tomorrow, if you're like, you know what we're selling? We're selling Brooklinen and I'm going at the taco truck business. What would be the first couple of things you would do when you were starting a taco truck?

Rich Fulup:
That's a great question, actually. So first is the product. So there's a lot of taco companies out there or taco trucks, taco stands and so on and so differentiated products, something new to offer and really have something to hang your hat on. So whether it's organic meat, natural meat, vegan tacos, whatever it is to have something, again, I'm a big believer in narrow. Speak to your audience and target them. So if it was I'm not a vegan, but I'm just an example. But you know, if it was vegan tacos, I'm speaking only to the vegan audience and giving them an amazing proposition at that point, then that's something that's interesting. And I know I built a strong relationship with somebody, rather than just like spraying around and just trying to, you know, just have another commodities product.

Rich Fulup:
So what I would do is really hone in on a narrower offering on that. And then after that taco truck, it's probably where is my audience and location on that. So it's like where do I want to set up to be in front of that audience? So really everything we do. And my mentality this is customer, customer, customer. So it's like who is the customer, how are you going to build that bridge and then where are they?

Brian Scordato:
I love that. So I want to be respectful of your time. Thank you so much for this is super, super helpful. I will make a plug for you and then ask you what your future product of Brooklinen is. My favorite is the recent product that... I don't know if it's my favorite, but I'm very into it these days. I got the real fluffy towels. I'm just frickin loving them. Yes. I would suggest that, you know, if you've got any.

Rich Fulup:
They're great honestly, I was actually gonna go for the same thing are super plush towels. They're the plushest on the market. I can say and coziest like emphatically. It's a really differentiated product. So if you haven't refreshed your towels in a long time, I strongly recommend it. It's a different experience.

Rich Fulup:
It's I will totally agree, they're awesome. This is great. Thank you so much. Got so much out of this. I really appreciate it.

Brian Scordato:
Thanks so much for listening. Buy Brooklinen and stuff. It's awesome. And if you've got a startup idea and a full time job, come say hi to me at gettacklebox.com. Also, if you want to help out the podcast, rate us, give us a review, share with somebody. All that stuff helps a lot. Appreciate it. Have a great week.

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Episode Description:

Rich and Vicki Fulop built Brooklinen after realizing there wasn’t an easy way to find and buy high quality sheets. There were no strong brands, no transparency into manufacturing - nothing they valued in a product. This interview is about how two founders turned that core insight and little else (no textile background, no knowledge of the bedding industry, etc.) into a global brand and the sheets I happily sleep on every night (and would whether Rich came on the podcast or not). Hope you enjoy!

Show Notes:

Brooklinen

 
 

You can find this and all future episodes on iTunes and here on gettacklebox.com/idea-to-startup.



Brian Scordato