Martin Rawls-Meehan has taken a different route to generating $100 million in revenue a year with over 150 employees. He has proven that building a profitable company can still lead to becoming a sizable enterprise without the need of taking outside capital. One which can give you even more control over your startup and its ability to live out your vision.
In this episode you will learn:
- Bootstrapping hacks
- Hurdles entrepreneurs face when not raising outside capital
- Best timing to take VC money
- How to fight lawsuits early on
- How to get the right people involved with your company
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About Martin Rawls-Meehan:
Martin Rawls-Meehan is the co-founder and CEO of Reverie, a sleep technology company headquartered in Bloomfield Hills, MI.
Over the past 15 years, he has had a significant role in driving triple digit growth of the adjustable power base product category, and more importantly, pushing the bedding and furniture industry to focus on selling sleep instead of mattresses and foundations. Visitors to Reverie’s HQ are distinctly aware of the unique “sleep culture” that team members embrace.
As CEO of Reverie, Martin Rawls-Meehan is responsible for guiding company strategy and oversees research and development of Reverie adjustable power beds, customizable mattresses and emerging services like Reverie Sleep Coach.
Martin Rawls-Meehan made the Home Furnishings Business 40 under 40 list in 2017, and is on the board of the Motor City chapter of YPO. He has an AB from Princeton University, a Masters from the London School of Economics, and JD from NYU.
Connect with Martin Rawls-Meehan:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrightee. Hello, everyone, and welcome to the DealMakers Show. So today we have quite a very interesting story that also happens to be an exception you know. We typically talk about the venture route and the hyper growth route, with getting financing from VCs but today, we’re going to be talking more about bootstrapping it from nothing all the way up to the state. With that being said, Martin Rawls from Revere, welcome on board today.
Martin Rawls-Meehan: Thank you very much from having me. So wonderful to be here.
Alejandro: So you were born in Boston, Martin, and both of your parents were teachers. So how did you get the entrepreneurial bug?
Martin Rawls-Meehan: It’s a great question. You know my mom was an entrepreneur in high school a little bit but definitely didn’t go that route long term. So yeah, I think I’ve just always been wired to do things a little bit differently. If I saw people going left, I’d be very curious about what going right meant you know. I never wanted to follow the same path that I saw the people are following. I’ve always enjoyed the challenge. Honestly growing up, I never thought of myself as somebody who would become an entrepreneur. It just kind of happened. There was an opportunity, a buddy of mine I’ve grown up with after college had an opportunity to start a company, and you know Sleep Technology is one of the things that we’re looking at among many. Really I was just excited about working with my friend and trying to build something up. It was kind of like the ultimate challenge, right. Everyone else was doing banking, consulting, right and for me to get in to this was very different, and that was exciting and you know I just threw everything and do it and have been very fortunate that it has worked out.
Alejandro: Got it. So is this your cofounder someone you met in, is this in Princeton where you studied?
Martin Rawls-Meehan: No, no. Middle school actually. No, he ended up going to the Parsons School of Design for product design. So he’s wired very differently…
Alejandro: Got it.
Martin Rawls-Meehan: … than I am. So yeah, he was middle school, high school. We’re really good best friends growing up and just decided to go in to business with him and ended up working out you know.
Alejandro: Was it like one day all of a sudden you’re like why don’t we you know start this business together or think about starting a business or how was that?
Martin Rawls-Meehan: Kind of. Kind of. I mean we’re kind of afraid. I mean it was definitely something that I don’t want to say it happened in one day. I mean his father was a businessman so he really wanted to go in to business and that was something he had been thinking about all of his life. And so he was thinking about doing it and he and I just started talking about some of the opportunities and I wanted to pull some of my friends into it. Other friends ended doing it at the time. Ultimately, it ended up just being he and I but originally we were talking about a larger group of friends. So I wouldn’t say it was spur of the moment but yeah, you’re 22 years old, you know, it was a little bit of that, right? It’s kind of like hey, what the heck, you know. Let’s go try this.
Alejandro: I love it. I love it. And typically you know just like what you were saying when you finish school, you either go in to banking or consulting. I mean those are like the different types of backgrounds that I see one some of the people that we have here as a guest on the show but in your case, you guys were in your 22, 23’s when the company started. So what kind of background or skill sets did you bring to the table versus your cofounder?
Martin Rawls-Meehan: Well, you know, so it’s interesting when we first started out you know again, so I’ll tell the story like this, you know, we didn’t really know how our backgrounds are really going to matter. Obviously he had a background on product design and that was something that he had you know at least initially thought he was going to focus on. That’s not really how it ended up shaking out. You know my background I kind of basic [03:57] education at Princeton. I took a lot of different classes but you know I was an East Asian Studies major which meant I’ve essentially studied the economics and politics of East Asia had some Chinese language in there. That really I guess helped out quite a bit with respect with developing relationships. I mean we went over to China. I worked in his dad’s factory for a little bit. I tried to understand the manufacturing side of things. He and I were going out and trying to develop some relationships with suppliers. So from an educational background, I’d say the language part of it probably more than anything is a big help. But what we’ve ended up doing you know he ended up essentially doing Revere in China which was its own Revere retail business in China. I ended up focusing on Revere pretty much everywhere else. My core product was the power base along with this customized mattress where he focus really on the mattress only. And so for the power base side, I had to learn a lot of engineering after college, right. So I was taking classes. I started the company also in the Boston area so I was taking classes at Harvard Night School on Electrical Engineering over the summer really trying to figure out how to build somebody’s products that we needed to build to be successful in the industry. So I guess the language background helped upfront but really I had to learn a lot on the things that a lot of the skills that I used today after college.
Alejandro: So what was the incubation process here, Martin, like until you actually realized, wow, we actually have a business here going on?
Martin Rawls-Meehan: No, I’d say honestly you know it was when we first getting real significant orders, 2004, 2005, people saw at that time it was primarily a power base product. People saw the power base that you know we were selling and liked the design and say, “Hey, you know, love what you guys are doing. We’re going to commit to you and you start getting some orders,” that at the time we thought were massive and now looking back on it, you know, it was like, wow, that really wasn’t that much. But people are willing to commit to your product. They’re writing some significant orders that are going to keep your business afloat if you can execute on them. That’s really when I said, gosh, you know, this could work. About two years after that we made it one of the biggest customers in the industry so at that point we’re like, oh wow, like we’re really going to make this happen. But I think it was kind of like end of ’04, early ’05 you know a couple of years in to it when we started getting our first orders that I realized this could work.
Alejandro: Got it. And how much capital did you guys invest initially to get things running?
Martin Rawls-Meehan: So my business partner brought a little bit in to the business and you know I invested whatever I could and was essentially working off of nothing. At the time, I was working a part time job teaching at a local college because I couldn’t afford to pay myself anything. We didn’t use much though. We probably started out a couple of hundred grand, that was it, between the two of us throwing it together. Everything else was essentially you know negotiating better payments in terms suppliers. You kind of pay the suppliers after we were getting paid by our customers, etc, etc. Just figuring it out how to bootstrap it and make it work.
Alejandro: Makes sense. Was there like any exercise or anything that you guys did in order to really understand how you would divide the responsibilities between each other?
Martin Rawls-Meehan: You know it was interesting. Early on, we weren’t sure how it was all going to play out. I was talking about bringing some other people in. You know what I knew is that I was going to be based over here in North America probably but other than that you know we weren’t really sure that kind of coalesced you know we’re both over in Asia. We love each other to death but also I have very different ways of kind of doing things. He wanted to be based in China and kind of do the Revere thing in Shanghai and focus on opening retail stores and all the rest of that which is a completely different business to what we were doing over here. So you know the business models were very different. We share the brand name and some product but the way we were going about doing things is very different. So he’s really been a very passive part of what we’ve been doing over here for the most part and I’ve been a passive part about what he’s doing over there. So we just kind of came to that understanding early and we’ve been doing our own thing.
Alejandro: Got it. Got it. So what was the business model or what have been the business model behind Revere?
Martin Rawls-Meehan: I mean we’re very power base focused early on, and that was our core product. That’s what, for those of you who don’t know the power base, it’s also called an adjustable bed or adjustable base at times. The head elevates. The foot elevates. Some have massage, different features. That was our core product at the time when we really like ’04, ’05 things started to take off and it still really is today. But we’ve essentially from our early days and up until now I think we’ve really began to appreciate that we’re sleep technology company. So we built our idea, our business around the idea that sleep is critical to everybody’s health and well being and when people sleep better, they live better, and our mission is to open people’s eyes to the power of sleep through better sleep technology. So that’s really what we’re all about.
Alejandro: Got it. And obviously bootstrapping the venture all along the way. So what kind of strategies did you put in place especially at the beginning because later on obviously you have like some revenue that you could put to work on the marketing or the advertising side but I guess that at the beginning, what kind of strategies did you put in place to gain some traction?
Martin Rawls-Meehan: Well, I think it’s interesting being an investor in some other companies now and knowing a lot of entrepreneurs who are in different industries and seeing how they’ve done it, I think I realized that the strategies that we employed may not work for everybody, right, but I’ll dive in on what we did and how we did it. We build a product, right, so our job is to take orders for said product. We build that product. We deliver said product as opposed to a service, right. So in our industry the key drivers for how much capital you need are very much dependent upon the payment terms that you have with your suppliers if you’re making the product yourself, how capital intense are the investments are required to build up a factory, etc. So we, Tony and I, leveraged he speaks Chinese, I speak Chinese. Spent quite a bit of time working with suppliers building off relationships of trust so that they would give us and extend payment terms to us, right, that allowed us to turn around and at the very least kind of match those payment terms with our customers and if possibly get slightly better so that we have a buffer of cash flow with which to work so at the very least we were running cash flow neutral to slightly cash flow positive which allowed us to essentially with a small infrastructure not need to go to banks, not need to go to investors to essentially bridge finance the business. Without that, we would have had to go get somebody to either loan us the money to bridge finance the order or go to a bank early on and without a track record that would have been very difficult.
Alejandro: Got it. Yeah, I mean you were mentioning that you speak Chinese so you have the possibility, you had the opportunity to have the operations in Asia which at the end of the day would have made the entire structure to be a little bit cheaper or perhaps make those margins work a bit better. So why did you choose the strategy of being in the US even though you could have lowered the cost a bit in Asia?
Martin Rawls-Meehan: Well, so we still did early on. All of our manufacturing was over there, right. So we built up the manufacturing network there. We’ve since expanded our manufacturing here to the US but some of the components that we bring in still do come over from Asia. So the Asian production particularly you know mainly in China and a lot in Taiwan, that was always a critical part of what we were doing and the language was very dependent or I dependent a lot on the language to go in and build real relationships with those suppliers. I think that some people appreciate relationships are critically important in most of the Asian countries in Taiwan in particular.
Alejandro: Got it. And…
Martin Rawls-Meehan: Taiwan and China. Yeah.
Alejandro: And why Detroit, Martin?
Martin Rawls-Meehan: Well, so born in Boston and you know I moved to Detroit at a relatively young age. So I grew up here for a good part of my life. I started to realize, I started coming to Boston and expanded it out. I bought the assets of an old power base manufacturing company in New York which is where we do some of our manufacturing now, but realized that if I wanted to grow the infrastructure and bring on phenomenal talent at a reasonable price, Boston was going to be difficult. The reasonable price part was going to be difficult there. There’s a ton of competition for good talent there and then Western New York the challenge was bringing on talent, right. So I thought about it quite a bit. I had a good relationships from childhood friends out here in Michigan. I felt like Michigan was a great place for a supply chain standpoint. From a talent standpoint, we have phenomenal engineering universities here. Michigan University being a good example of that. So my thought was alright, look, you know, maybe we should just pick up and move some place. Move the HQ some place that I’m familiar with where I’d be comfortable raising kids and which I think has all the attributes that we’re going to need to be a successful innovative company right now just manufacturing but true innovation I thought Detroit has all those ingredients and it has delivered on that. I think it’s been a good choice.
Alejandro: Got it. How many employees do you have now, Martin?
Martin Rawls-Meehan: 150. Sometimes that kind of goes up or down dependent upon if we’re doing you know more manufacturing we’re bringing in some temp later but 150 is the number.
Alejandro: What’s kind of like the distribution geographically?
MartinRawls-Meehan: Oh gosh, you know ballpark you kind of say half here in Michigan, half here in New York. It’s not quite like that but you know about that.
Alejandro: Got it and probably like the folks that you would have in New York is like more in the sales side of things or what are the profiles?
Martin Rawls-Meehan: Yeah. I would say western New York is where we do manufacturing and most of our wholesale sales and support. And Michigan, we do some direct consumer research and development, marketing, some customer service. It’s pretty well split up.
Alejandro: Got it. 150 employees and no outside investment, it’s remarkable, Martin. So I guess the question that comes to mind now is from a leadership perspective or management skill, obviously the early days when you were starting out you know like are completely different from now where you have a 150 employees. So how have you seen yourself as a leader change to adjust yourself to whichever cycle the business was in?
Martin Rawls-Meehan: Yeah, it’s interesting. Early on, you don’t know what you don’t know, right. So you know these great deals are coming in. You’re kind of flying by the seat of your pants. You’re doing whatever it takes to figure stuff out plain and simple, you know. If I got to go build beds, I’m building beds. Whatever I need to do I ought to do it. You have that mentality early on and you’re just leaning by grit and elbow grease as much as anything. I think I’ve come to appreciate through some different business cycles you know just how important it is for me to build up a very strong team of people that are independent and be less a part of the process myself because honestly I can be a hindrance as much as I can be a help sometimes and you know that there’s an obligation to build this thing to go well beyond me and my own capabilities, right. What happens if I get hit by a bus or we do sell it to outside investors? I mean I want Revere to continue beyond just me and I think I owe that to all the people that showed up here and dedicate their lives to making this great. So I’ve really learned leadership a lot of it is about being more hands off and building something with great people around you and then trusting them to do things maybe a little bit differently that you would do it yourself but at the same time there’s still a lot of leading by example and if you’re going to ask people in your company to sacrifice you want to be the first one to step up and sacrifice yourself. So a lot of different lessons over the years, man. I could probably go on and on for like an hour on this one because it’s very different for me now than it was when I was in my early 20s.
Alejandro: I hear you. And you were taking about great people so how do you find those?
Martin Rawls-Meehan: Well, good question. I mean look I think so there’s two things, right. There’s great people, right, and there are a lot of great people out there and then there’s great people for our business and that’s a much smaller number. And one of the things that I’ve come to appreciate is developing a set of core values for your company that kind of define the types of people that you’re looking for and the people that are successful in your work environment and with the mission that you have and then hiring based off of those core values. Over the years I think we didn’t do a good enough job at that. I didn’t do a good enough job at that and I hired people that you know maybe weren’t great fit but were good people and great people on their own right, they just probably didn’t fit our core values and that has been a problem for us over the years. I think sticking to the core values and using that as a filter and getting the right people on the bus and people that don’t belong off the bus as quickly as possible has really helped us quite a bit. As you grow and as you mature and you go through up cycles and down cycles the right people are going to get you through everything and having those core values as a filter has been critical.
Alejandro: And I love the fact that you’re mentioning that it’s a bus. Jim Collins on the book called Good to Great, he says that this type of companies, they’re like a bus without a direction, that if you have the right people seated on the right seats, then you’ll get there. So I love it. So building a business from the ground up especially during the early days there’s so many fires that you need to put out.
Martin Rawls-Meehan: Yup.
Alejandro: And there’s one thing that you guys had to deal with which is even a bigger pain so you attracted I mean you were gaining some good momentum and traction and obviously that gains attention and attention from larger players and you got some unwanted legal attention from a large corporation.
Martin Rawls-Meehan: Oh yeah.
Alejandro: So what happened?
Martin Rawls-Meehan: Oh yeah. Well, long story short, right, we ended up on a lawsuit with like the 900 lb gorilla if you will on our industry. I don’t want to get in to it too much. I think that the end result though because actually we have good relationships with them now, right. It’s like a completely different phase in our business life cycle so I don’t want to turn too much of that up but you know for the education of other folks in the podcast, I mean I think at the time I believe and they made us believe but I think there was a decision made there. And I said, “Hey, look, we think it’s more cost effective to try and sue these guys out of business than it is to buy it, right, or to compete against them.” [20:10] my opinion but I think whether or not they would say happened to this case I think that does happen in a lot of cases where I knew the up and coming start up and you don’t have a lot of money behind you and maybe it’s cheaper for somebody to sue you out of business than it is for them to buy you or compete against you. So that happened. We ended up, we were very fortunate. Our business was just starting to pick up steam and we were able to pay for that lawsuit out of our own profit. It was great but it was pretty tight and it was tough. And I believe the decision was ultimately very favorable for us. We ended up selling it out I think on very favorable terms but again I’m not going to get in to it too much. I feel looking back on it I’m very happy that we went through it and I think it was a very positive experience for us. But at the time it was like oh my god, it’s earth shattering, right. You get this letter in the mail and here I am I got a couple of people on my company. We’re small and we’re just starting to get some momentum. You get this letter that said, “Yeah, we think you’re infringing on our patents.” It was funny at the time I didn’t know anything about how you deal with these letters, right, so they actually write in there and say, “Feel free to contact me if you have questions from this,” this is on the other side, their in-house counsel so I called the guy up right away. I’m like what are you talking about? I don’t think we are infringing.” He said to me, “Why are you calling me? Go get your own lawyer.” I’m like, “Lawyer? I don’t have a lawyer. What are you…” and I’m saying, “You said to call you.” So there’s this process that you’re supposed to go through that’s extraordinarily expensive, right. You go outside. You get outside counsel. You fight those lawsuit. You end up spending seven figures just to get to a point and the hearing process where you can actually go back and how to get the case thrown out or settle it for a dollar, right. So it’s very difficult for young companies to deal with these stuff and we were fortunate that we got through it. My message to any young entrepreneur who gets that letter if you think if you’re in the right, fight it. Fight it with everything that you have. Do not give up and figure out a way to get through it because it’s possible. It’s absolutely possible. It might seem very bleak. It might seem very difficult but it’s a part of the process in certain industries and you just have to deal with it. When you get through the other side, you were so much stronger and so much better off and again like I said now we have good relationships with them and other folks in this industry that we’ve had challenges over the years. It’s called growing pains, right.
Alejandro: Sure. And how much did it cost you in legal fees just out of curiosity?
Martin Rawls-Meehan: Oh god, I don’t know for certain but I think it was close to seven figures, just to kind of get through to the initial we call the markmen phase of the lawsuit and if we haven’t had such a favorable markmen hearing and been able to setting it out the way that we did, it would have been a couple of million dollars more to see it through the trial. I mean have lawsuits to see through to trial these days are running I think in the neighbourhood of $5 million so it’s very expensive.
Alejandro: Wow. Wow. So how did your views around IP change after going through this nightmare?
Martin Rawls-Meehan: So we immediately developed a patent strategy, right. And one of the main things was we don’t want to get sued again, right. And people are not likely to throw a frivolous lawsuit at you if you got some ammunition to throw back at them, right. Secondly, we wanted to protect our IP because we’re developing a lot of really cool stuff and we realized you know when used properly the patent system is a good way to protect IP. So today we’ve got between the power bases and the mattresses some 70 or 80 patents that have been granted. And that’s a big part of what we do but at the time it was very new for us so that has become an important part of our process but it was not before this lawsuit.
Alejandro: Is it accurate that you actually studied law right after this thing?
Martin Rawls-Meehan: Yeah, that’s right. I ended up going to law school as you were going through this you know and all the other things as a young entrepreneurs, all the growing pains because there are always some legal woes here, there that you’re dealing with. I wanted to learn and understand. That’s just the way I am. I threw myself in engineering because we were a very engineer focus company with our power base products. I threw myself in to law school because I felt like I want to know how to talk to my attorneys. I want to understand better what’s happening here. Hindsight being 20/20, law school they teach you how to think a little bit more than they teach you about the processes but I still think it was a very valuable experience for me and I did you know call it pseudo full time because I was still running the business and travelling quite a bit so it took me a little bit longer to complete the degree but I still think it was very worthwhile.
Alejandro: Really cool. Yeah, I’m a recovering lawyer myself, Martin, so you know I can relate.
Martin Rawls-Meehan: I love the recovering lawyer. That’s fantastic.
Alejandro: I can relate. So the operation of Revere for the most part is I mean the bedding industry I mean especially given where you guys started, it was happening offline. So how have you seen kind of like the digital world shaping up the space?
Martin Rawls-Meehan: Well, it has been an interesting adventure. I mean we look back like 2008 I think we came out it was 2007 somewhere on that timeline we came out with the first iPad connectivity with the power base, right. So you could connect your iPhone. It was like the your iPad open up to your power base and we can make it go up and down and everything and that was just like the coolest thing, right, and now you’ve got Google Home and Alexa and the internet of things and all the different ways your bed can connect up to your environment and receive quality tracking. I mean it’s really amazing actually how much it has changed, right. When we first got in to it, there’s none of that. Hey we have a remote control. Your bed goes up and down like that was it. So the digital world and connectivity to the internet of things I think has changed our industry quite a bit. I don’t think we’ve quite reached consumers with that the way that we want to or need to. I think it’s still early stage for that but look, people are starting to really understand and appreciate how important sleep is to their health. There’s an awareness there. People are in the sleep quality tracking and those devices and we’re now connecting that up to the bed, like tracking your sleep through your app, hooking up with like the Apple health monitors and other sleep tracking devices allowing you to set different bed positions based off sleep quality, all these cool stuff that’s really only opening up because of the internet of things and all the devices around it. So it’s exciting. It’s really exciting and I’m just happy to be a part of the industry at this point in time.
Alejandro: Normally, the crowd that’s a little bit more concerned about the sleep is kind of like the once that are maybe like up north the 40s or 50s but I heard that you guys your crowd or the demographics is more towards the younger folks. How is this possible?
Martin Rawls-Meehan: Frankly we serve, we’re everywhere. I mean our demographic are pretty well spread out. I think you’re right that there’s a higher level of awareness and I guess as people get older they tend to have a little bit more trouble sleeping and they become aware of it in ways that they weren’t aware of it before. But look the reality is you know that sleep is more important to your overall health and well being, that’s both physical and mental than nutrition or exercise. So that doesn’t just kick in when you turn 40, right. Just like good nutrition doesn’t kick in when you turn 40 or exercise doesn’t matter until you turn 40. It’s important throughout life. In fact, sleep is probably most important for young children, teenagers, right. It’s absolutely critical at different stages of physical growth and the growth, brain development growth. We talk a lot about that with customers. We work with folks in our sleep coaching program and as a part of our educational outreach, we make that a big part of what we talked about so I think for us our demographic really reflects the way that we educate and the way that we talk about our product. And that’s why we’ve been able to reach younger people because it absolutely does matter. They’re not just as aware as folks who are maybe say 40 and older. And so it’s about reaching out to them and making them aware and then the light bulb goes off and they’re like, Yeah, I don’t want to stuff my face with McDonald’s French fries everyday anymore than I want to sleep poorly. And that light bulb goes off and all of a sudden they’re willing to invest in the rest in the way that you know maybe most people their age are not.
Alejandro: I hear you and I actually went through that transition of you know avoiding McDonald’s and avoiding uncomfortable bed. So I can relate to that.
Martin Rawls-Meehan: Does that mean you’re sleeping on a Revere now? I got to know.
Alejandro: So I have to ask you this question. What kind of bed do you have at home? I mean what kind of bed is it?
Martin Rawls-Meehan: I have a Dream Supreme II Natural, dream top which means that the head is split. So it’s a king size with just the head split so no seam on the middle. And I’m on the 90 power base. I sleep on the product. We’ve always slept on the Revere. My kids are on Revere. In fact, when I travel I go to hotels, I have a hard time. That’s probably the hardest part about sleeping on Revere. We get this from a lot of people will say this like, “The hardest part about having your bed in our house is that when we travel, we’re miserable.”
Alejandro: I can also relate to that because I have my bed also and it’s just tough to travel. But I wanted to shift gears here a little bit and talk a little bit more about the business itself and the structure. So it has been reported that you guys hit the $100 million mark in terms of revenue. At what point did you tell yourself, Martin, that you know it made sense to continue bootstrapping rather than perhaps taking outside capital to scale?
Martin Rawls-Meehan: Well, look, I think we’ve talked about it at different points over the years and it may make sense for us to take outside capital at some point. For me, I think the analysis really comes down to this. If you want to dive head first in to a massive branding effort in our industry and go out there and just swing for the fences and become the next $4 billion brand, you’re going to have to put some really serious money in to marketing and you’re going to have to be prepared to absolutely fail. And I think at that point, you know, you’re not going to be able to do it from your own profits and you’re probably not going to want to do it with just your own capital. You would want to bring in some outside capital. And so for us, I think we’ve talked a little bit about where we want to take the brand and I think at the point where if we ever made the decision, okay, look, we really want to be that next multi billion dollar brand, that’s when I think it would make sense for us to take an outside capital. But we’re growing very strongly as we are. We’re building a brand in a really interesting space a little bit niched and we don’t need that right now. And so maybe we’re going to become the exception to the rule and keep doing that because we’ve been able to successfully build a brand a little bit differently. I think if we wanted to go that traditional path, we’ll just say we’re going to go do massive amounts of television advertising in the next 24 months. We want to be on that multi billion dollar trajectory, that’s when we would go take outside capital.
Alejandro: Got it. And I would imagine especially during the early phases when you’re attracting talent and we were talking about this earlier in some of these companies that decide to go the traditional route they grab part of the stock option pool to compensate and incentivize folks because they’re seeing that VCs are putting money in so eventually this is going to an exit. So when you don’t have that, what kind of incentives do you use to get people excited?
Martin Rawls-Meehan: It’s great point. We’ve been very fortunate that we’ve done well over the years so we can afford to pay our people well, a fair salaries and good bonuses when they perform well. So we’ve always been able to be competitive from a straight salary and bonus perspective, right. You’re right, stock options and you know that type of thing become they’re critical and at the very early stages some top leadership talent you know stages that we are haven’t had to go there yet, but obviously maybe things would have been easier for us if we had but I would say to answer your question, you know because we do pay people well, the other part of it is beyond the pay, our people showing up here for a deeper purpose than just to get a paycheck and to have something to do, and that’s where our vision and our core values come in to play. We absolutely believe that sleep matters to people’s health. We absolute believe that we’re making a difference in people’s lives and that means something. So when people come to work for us and hold our core values close to their heart, that means that they’re coming here because they believe in what we’re doing and that deeper purpose matters. We also have a lot of fun doing what we do. We work very hard but we play hard and we do good things for the community around us, things that everybody gets involved in. I mean I think you know the people that are here are here for a purpose beyond just showing up and being a part of designing and building beds. It’s what that means to them and to the people that are impacted by our product that I think makes them really want to come. And so yeah, stock options are nice but I think more important than anything else you treat your people fairly and well, but you have that deeper purpose that resonates with them that’s when things really click.
Alejandro: Got it. Got it. And I imagine as well just to follow up on the financing side front when you are bootstrapping the entire operation and you don’t have the outside capital and you see others that are raising tens of millions, you know, it can become frustrating. I mean I have some friends that are in that position. It’s just frustrating to see some competitors just like raising money and just like putting it all in marketing. So how can you lower the noise so that you can continue to be effective and pushing forward?
Martin Rawls-Meehan: Well, look, you know, I’ve looked at it this way. Number one, it’s all being a leader is all about, right. You need to be able to inspire people and look, I don’t mind going up against companies that can afford people more from stock options, right, because what we do here can and should inspire the hell out of people. And if it doesn’t, we probably don’t want you here, right. And so there’s almost a little bit of a self selection element of it. You know, it’s probably not entirely true but that’s how we have to think and we go out there and I think the people that are here are inspired and so you have two choices, because look, frankly it can be frustrating. You kind of wish you have those resources but at the same time not having it, like with anything else being an entrepreneur, not having it you’re forced to really evaluate what matters. And honestly, being inspired by what we do is probably the most important thing and folks that you know we’ve had people turned down jobs, some pretty big impressive companies, Google, Apple, to be here and take less, and that’s because we care about what we do. They love what we’re all about. They love the other people here and you know the paycheck is not the only thing that matters. Folks can go to a larger company like say some of the Apples and Googles of the world and you know maybe they have a smaller impact but it’s really good on their resume. It’s not to knock those guys. Those guys are awesome. But here, the size of our company, you’re going to have an immediate impact on people’s lives and you’re going to see that on the work that you’re doing today it’s going to be out there in a couple of months, right, and you’re going to see that. And some people take an enormous amount of pride in that and those are the people that we want here.
Alejandro: Got it. Yeah, I know and I agree. It’s all about the problem and not so much about the paycheck. So I love it.
Martin Rawls-Meehan: Yup.
Alejandro: Now looking back, there’s probably some people that are listening and thinking about whether to go at it and bootstrapping the operation or taking outside capital. I guess in your case, Martin, kind of like looking back, what were some of these challenges that you faced with building the business being bootstrapping the operation?
Martin Rawls-Meehan: Yeah, I mean I think obviously if you have outside capital, it makes things a lot easier. You’re not fighting quite as hard over every little dollar. At the same time, what are you giving up on exchange for that, right? And I think if you can raise capital without giving up your vision and control, then I think that’s a smart way to go about it but you know I would recommend that you only do it when you need to do it. It also depends on your business too. If you’re in a business like ours and you think you can leverage cash flow and relationships and run your business for a period of time without raising capital, then do it. If that’s an option for you, then go out and raise capital and build those relationships as quickly as possible. I see it done both ways but I think every entrepreneur has to ask themselves what are they comfortable giving up and do they need to do it to realize their vision for the business. I wouldn’t do anything until you need to do it.
Alejandro: Got it. Got it. So I guess kind of looking back now, Martin, if you had the opportunity to have a chat with your younger self before launching the business and you were able to only just give yourself one piece of advice, what would that be?
Martin Rawls-Meehan: Simplify. Simplify. Simplify. I’d say simplify and you know what core values. And I would probably if I could only give myself one piece of advice, I’d go to core values. I would have established the core values earlier and I would have hired based off of core values out of the gate and made that—I think having the right people on the bus is the most important element of any business. There are a lot of great ideas and great products out there that never see the light of day because they don’t have great group of people, the right group of people driving that bus. And so for me, I think we’ve learned a lot of things the hard way over the years. I think the right group people for the right company can do almost anything. They’ll run through almost any wall but you need that because when you don’t have that even little hurdles are just balance, right. You can never get over them. You almost go backwards. So yeah, the core values, hiring based off of that building around that I think would be like the first thing that I would tell myself.
Alejandro: Yeah. Got it. So what is the best way for folks that are listening to reach out and say hi, Martin?
Martin Rawls-Meehan: Oh gosh, shoot me an email. I read, I try to read every email that comes in, firstname.lastname@example.org. I’m easy. I can’t promise you I’m going to reply. I apologize in advance. That’s a real challenge for me but I do try and I really do read almost everything that just the ones that comes in to my email but customer service stuff. I try and keep tabs on things and that had become harder and harder over the years.
Alejandro: Fantastic. Well, Martin, thank you so much the valuable insights on how to bootstrap a company from like nothing to all the way to where you are today. So congratulations on the success as well.
Martin Rawls-Meehan: Alejandro, thank you very much. I appreciate you having me on. Thank you.