How Brooklinen woke up the bedding industry by going direct-to-consumer

Zendesk_Repeat Customer podcast episode 6

Repeat Customer podcast, episode 6


When millennials Rich and Vicki Fulop couldn't afford the luxury bed sheets at their hotel in Las Vegas, they did the unthinkable: build a company to make the sheets themselves. In the process, they also created a customer experience—and brand loyalty—where none had really existed before.

Brooklinen's Rich Fulop tells the story of how he bootstrapped a direct-to-consumer bed sheets company by focusing, at first, on the underserved millennial demographic. In this episode of Repeat Customer, we break down how revolutionary this idea was and how traditional bedding companies were neglecting the customer experience that became a cornerstone of Brooklinen's success.

Featured in this episode:

  • Brooklinen CEO and cofounder Rich Fulop
  • Elizabeth Segran, a staff writer at Fast Company who covers retail and fashion
  • Brandon Rael, a retail strategy and operations expert

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Transcript

[Mio Adilman]
Hey! This is Repeat Customer, a business podcast from Zendesk. And I wanna tell you a bedtime story.

No, no, no. Not that kind of bedtime story. This one starts in a hotel room in Las Vegas.

[Rich Fulop]
When we checked into the hotel, it was really strange. We put our stuff down after a long flight. We lie down on the bed we're like, "Oh my god, these sheets are really great."

[Mio Adilman]
Rich and Vicki are a young couple, like mid-20s from Brooklyn, on a quick getaway to Vegas, and they lie down on the most. Comfortable. Bed sheets. Ever.

[Mio Adilman]
Mio: What was so nice about them?

[Rich Fulop]
You know what? At the time, I couldn't tell you anything other than they just felt great. They were smooth and soft and felt like broken in, and lived in. They were just really, really nice. And the perfect weight and texture. They weren't too swarming and warm, they were lightweight and crisp.

[Mio Adilman]
So now Rich has to have these sheets.

[Rich Fulop]
And it was interesting. The hotel that we were staying at actually had a store in the lobby that sold all the furniture and fixtures that were in the room. So you could bring home the lamps if you like them. The mattress, or the sheets in our case. So we went downstairs and we try to buy them because we loved them so much, and we found the price tag was a little outrageous.

[Mio Adilman]
Totally outrageous!

[Rich Fulop]
$800.00 for a sheet set.

[Mio Adilman]
Wow! That’s a lot of money for bed sheets.

[Rich Fulop]
They were really nice, but we were in no position to spend that kind of money, and we never had before.

[Mio Adilman]
So normally, you know, what happens in Vegas, stays in Vegas. But Rich just can’t let this go.

[Rich Fulop]
I came home from the vacation and I was kind of obsessed. I went down this rabbit hole and I was searching in forums, Reddit...How can I back-channel my way to get a cheaper set through the distributor or something. And although I didn't find the distributor, what I actually found was a lot of people looking for the exact same thing...Which kind of made me feel not so crazy in that moment..It was like, okay I'm not crazy, and I gotta figure out another way to find these sheets.

[Mio Adilman]
Rich searched and searched but sadly never found those Vegas sheets. But he did find other people looking for the same thing. So, still totally obsessed, what he did next kind of blows my mind.

[Rich Fulop]
My name is Rich Fulop, CEO and co-founder of Brooklinen. We're a direct-to-consumer company founded on the philosophy that people deserve simple, beautiful, home essentials without the luxury markup.

[Mio Adilman]
That’s right. Rich wanted those bed sheets so badly he started his own company to make them. It’s called Brooklinen.

Welcome to Repeat Customer, an original podcast from Zendesk about how companies create great customer experiences.

My name is Mio Adilman, and Zendesk is a customer service and engagement platform.

Today we enter the surprisingly fascinating world of bed sheets. Brooklinen, along with a few other bed sheet companies, as well as a couple of mattress companies, caught the traditional bedding industry totally asleep on the job, by creating an actual customer experience where there really hadn’t been one before.

OK, Brooklinen. It’s a mashup of the words Brooklyn and linen. And the company was founded in Brooklyn, in 2014, by Rich and Vicki Fulop. Hipster sheets, totally bootstrapped by the two of them, as you’re gonna hear. With a dependence on customer experience partly because of the bootstrapping, but for other interesting reasons too. And it’s paying off. Within two years they were at $25 million in revenue, and that number keeps growing.

Brooklinen has really tapped into something here. Something we might not have already known about ourselves. When it comes to bedding at least. To better understand it, let’s look at what buying bed sheets was like before Brooklinen. Remember, Rich came home from Vegas looking for those amazing hotel bed sheets that cost $800. Surely they’d be cheaper at, say, a department store. So I check this with someone who knows department stores.

[Brandon Rael]
The prices were really inflated. It was lack of transparency on pricing promotions, where the goods were actually sourced from, and it really was dominated by the salesperson, and we controlled the experience for the customer, which wasn't always easy.

[Mio Adilman]
That’s Brandon Rael. He’s a retail strategy and operations expert.

[Brandon Rael]
At the time I was working for Macy's, in their furniture division, as an assistant buyer, in the mattresses division…

[Mio Adilman]
Get ready for this.
Once you start delving into higher quality organic or a thousand thread sheets, you're looking upwards of $750 to $1,000 for a king bed for a set of sheets. Very intimidating to say the least.

[Mio Adilman]
That’s crazy. Department stores were charging the same markup as a hotel! So, what about the big box stores? That’s where Rich Fulop went looking for a better price.

[Rich Fulop]
For the most part, the sheets that's in those stores range in $50 to $100 or so. And most people end up walking out of the store spending $75, $80 on a product that they're really not that excited about but it's something that they need...and the experience was just awful. You have these fluorescent lights shining in your face. It's just this huge array of plastic, and colors, and zippers, and swatches. And really nobody there knows what they're talking about, there's not that much information on the packaging.

[Mio Adilman]
Rich is in his mid-20s. He’s about to enter the MBA program at NYU so, you know, he’s growing up a bit. He’s been inspired to introduce a little luxury into his life via some nice bed sheets, and he comes up against a brick wall.

[Rich Fulop]
And it's just very overwhelming and confusing when the way a lot of millennial shoppers, myself included, shop is we like things curated and all the crap cut out…[And I thought there was a really huge gap that I identified between those super-high-end $800.00 sheets, and the mass store that really has a terrible buying experience, with no transparency, no information, or anything.

[Mio Adilman]
The need for transparency when it comes to something like bed sheets might seem a bit precious, but this is what can happen when you don’t know enough about your sheets.

[Carmen Griffin]
Hi. My name is Carmen Griffin. My blog is livedeliciously.ca…this was my first investment, quote/unquote, on sheets and um I spent good money on these bamboo sheets, and they fell off the bed the first night. They just with my duvet cover just slowly shifted off the bed… And then, on the other side of that, when did they did stay on the bed, I found that I just got so hot. I would just be in a puddle of sweat, definitely not sexy when you're with your spouse or your partner waking up in a puddle of sweat...It was kind of embarrassing, because I guess he didn't know what was going on, so he woke up in the middle of the night, and he just turned to me, and he said, "Did you just pee the bed?

[Mio Adilman]
Now that’s some bad sheet. Sorry, I had to say that.

[Rich Fulop]
We thought there was an opportunity to have a really great customer experience where we're..explaining things to people. Really guiding them along in the process to make sure they get the product that they're looking for and that they're really gonna be excited about.

[Mio Adilman]
This happens to me all the time. I decide I want something. I go to buy it. Either can’t find what I’m looking for, or the shopping experience is too irritating, so I’m like: “you know what would be a great idea for a business?” Except, in my case, it remains just a great idea. Not for Rich and Vicki. They decide to actually do something about it. But remember, they’re in their mid-20s. It’s not like either has ever started a company.

[Rich Fulop]
I was calling factories all over the world. I talked to one here in the US and he was so shocked. He was like I haven't gotten a call from anyone under 50 years old trying to enter this space...I was like great, that means I'm probably on the right track here is what I thought to myself...So what we did was, we identified who we thought the customer was. And it was this gap, call it 23 to 39, sweet spot is like mid to late 20s.

[Mio Adilman]
Because that's who you were.

[Rich Fulop]
That's who we were.

[Mio Adilman]
Rich was like, no one is making bed sheets for this really big demographic that I’m a part of. But does anyone else actually care? I mean, he’d found people searching for the same hotel sheets, and if you go on Youtube, there’s tons of videos of people trying to get their sheets to feel like hotel sheets. So this is where Brooklinen, before it’s even Brooklinen at all, starts focusing on the customer experience.

[Rich Fulop]
We went to the big box stores, and the department stores. And we kind of just hung out in the bedding section….and we’d say "Hey, do you shop online?" "Yes." "Do you buy your clothes, apparel online?" "Yes" "Do you shop for furniture, home goods online?" "No." "Do you shop for bedding online?" "No, never." " Do you know what brand of bedding you have?" "No." "Do you like your bedding?" "I guess it's okay, but it could be better." We're getting to this point where we talked to some 500 people on this matter. Not only in the store but also in, we went to coffee shops around town where people would hang out and do work..and what we ended up finding out was nobody had any brand loyalty or brand knowledge here.

[Liz Segran]
With some categories, they were just so boring that you never really felt that sense of loyalty because there was nothing to be loyal to, right?

Hi, I'm Liz Segran. I'm a staff writer at Fast Company Magazine where I write about retail and fashion.

The reason they didn't develop these brand identities is because they thought that sheets were these irregular purchases. Like what is the point of creating a brand identity around a pair of sheets when, it's not something that you're going to sell somebody multiple times a year... When some of these sheets, get really old, I'll go out and buy another pair and that's it.

[Mio Adilman]
We’re gonna hear a lot more from Liz. She has some really interesting insights into Brooklinen’s success. But first, Rich took that market research a step further. And this was all happening while he was still in school for that MBA.

[Rich Fulop]
And we asked them...We said "Look, how much would you be willing to pay if it was A, B and C?" It was a great product, there was social proof, there was good photography. All the things that could help you be guided in the process. How much would you be willing to pay? And at the time we came out with, okay we're gonna offer those $800 sheets for $200, and that's really not what with we found out. What we found out was most people are spending $75, so we had to come out of the gates and be closer to $100.

[Mio Adilman]
If you’re like me, you’re probably wondering how can someone sell $800 sheets for between $100 and $200?

[Rich Fulop]
The blueprint was direct-to-consumer, cut out the middleman and sell direct to the customer.

[Mio Adilman]
Direct-to-consumer, that’s how.

[Rich Fulop]
At the time there weren't a lot of direct -to-consumer brands. Very few. So I was a customer of Warby Parker, I got my glasses there. And I had worn glasses since the second grade, and it really changed..my perspective on this space in general. I had recently bought pants from a company called Bonobos, I think they only made pants at that time.

[Liz Segran]
Both of these brands were selling products directly to consumer and were charging less than competing brands.

[Mio Adilman]
A lot of stuff is direct-to-consumer now, but not as much back then. So it helped that Rich’s target demo had grown up online. But with the advantages of direct-to-customer also came some challenges.

[Rich Fulop]
It sounds easier than it actually is obviously, because you have to master supply chain, and the product, and the service, and the marketing. There's nobody else to assist with that. And that's what those sales channels do, those department stores, or those big box stores. They handle all of the inventorying and the sales force on that stuff, and the service...We had to do everything.

[Mio Adilman]
The decision to try direct-to-consumer meant they would have to do everything, and they means two people. Rich and Vicki bootstrapping Brooklinen. But it played into their focus on customer experience.

[Rich Fulop]
That was an opportunity also to really sell to the customer and explain to them of why our product is great. We're really proud of our product. We think we have a best in class product. So we wanna tell everybody about it and explain to them why. Direct -to-consumer is an opportunity to talk directly to the customer and not only explain to them, but also get feedback.

[Mio Adilman]
We’re gonna talk more about this positive feedback loop in a few minutes, but, at this point in Brooklinen’s story, the big thing direct-to-consumer gave us besides a much better price was the transparency. They really help you through the process of buying sheets. Something Rich felt was really missing from the existing in-store experience. If you go on to Booklinen’s website, as I just did, you too will become an instant bedsheets expert able to talk about long fibers, weaves, single ply yarn, and thread count.

Thread count! Until now, the only thing anyone I know ever mentioned when talking about bed sheets was thread count. But did you know, it’s an easily manipulated metric? Hmm?

So Brooklinen launches direct-to-consumer with one type of bed sheet.

[Rich Fulop]
When we first started it was cool. It was crisp. It was thin. It was kind of like that freshly pressed button down.

[Mio Adilman]
And for people like that bamboo sheet victim Carmen who you heard from earlier, what was this new experience like?

[Carmen Griffin]
I love that feeling when you go into a fancy hotel of getting into the sheets and just feeling like you're getting hugged by the sheets. They're soft. It's like butter on your skin. It just feels like I'm being transported into luxury hotel. It's amazing. I love that…

[Mio Adilman]
Somehow, Brooklinen had managed to approximate a hotel sheet experience at a fraction of the cost! And they kept it super simple, in a way that also, oddly gives you great variety.

[Rich Fulop]
What you see in the big box store is the zipper bag with one color all around. What we said is, "Hey, if we offer eight colors, all centered around the same color palette. And all the patterns...our stripes, or window pane...it's all based on the same color palette, so you can mix your pillowcases with your duvet cover with your sheets.

[Mio Adilman]
The mix and match approach to buying sheets was a game changer. But Liz Segran at Fast Company says there was also something to Brooklinen’s unique choice of colors.

[Liz Segran]
First of all, all of their products are very gender neutral. In the past, a lot of bedding companies had very feminine marketing and very feminine products. Bedding was often pastel colored, all of the imagery around it was very soft and these very feminine home backgrounds. Brooklinen just had a very different aesthetic. I don't think they have a single set of pink sheets.

[Rich Fulop]
I've never been pitched or marketed to in this product in my entire life, yet it's something that I've interacted with. I like simple, solid color, clean whites or grays that are very neutral. I'm not a decorator, I want it to go with my stuff and be easy and turnkey on that stuff. I think I can't speak for all guys, but I think it's something that's very relatable, and something that people really gravitated to, like this is the solution, it's easy, it's going to come to my door, it's going to match everything and it's going to be extremely comfortable.

[Mio Adilman]
Brooklinen started marketing to guys. Something that hadn’t really been done before.

[Liz Segran]
My husband's a great example. We got a pair of Brooklinen sheets that were like gray and he really likes the experience with it. Because it didn't seem like the brand was marketing to me and it seems like it was marketing to both genders, he suddenly developed some interest and loyalty in the brand in a way that maybe he wouldn't have before.

[Mio Adilman]
For most bedding companies, there is an 80-20 customer split women to men. For Brooklinen it’s 50-50!

So Brooklinen launches with a different product experience and an actual brand identity that people felt something for. They targeted underserved demographics, not just millennials and men, you know, also urban hipsters with those cool, muted colors and patterns. And they benefited from some good timing.

[Rich Fulop]
Casper launched on the same day we did.

[Mio Adilman]
No! Really?

[Rich Fulop]
April 22nd, 2014...We had no idea about them.

[Mio Adilman]
Oh wow. So it is a broader cultural thing that's happening then?

[Rich Fulop]
Definitely...there certainly was something to it that was deeper that we were striking a chord and identifying a problem there. And my perspective on the mattress industry is, as it explodes, that's great. It brings more attention to the space. More mattresses need more sheets and more pillows and so on. All boats rise with the tide.

[Mio Adilman]
At the same time, the idea of sleep as a health concern was starting to gain some traction.

[Liz Segran]
It's so interesting that sleep itself has been commoditized right?...It's very compelling because as you're saying there's all this other research talking about how, not getting enough sleep every night was going to kill you, it's going to increase your chances for all these diseases, it's going to make you fat. There's all of this research that talks about how important sleep is now.

[Mio Adilman]
So as we started to prioritize sleep, where and on what we slept became more important. But there were other cultural forces at play here too.

[Liz Segran]
Yeah, I think that's really fascinating...We saw this whole direct to consumer evolution, sort of parallel what was going on with millennials. So, the first wave of brands that hit the market that really resonated with millennials were beauty brands like Glossier, things like that. There were like all these fashion startups that entered the mix. Then we got to all of the home brands that started using this direct to consumer approach. I think that was because these were increasingly more expensive price points. Also millennials were sort of, they were getting older, they were spending less disposable income on fashion products and more on their homes.

[Mio Adilman]
From an experiential standpoint, I think it goes beyond just mere identification to almost..and I’m just trying this out on you, a confirmation of becoming an adult by spending a bit more on these sheets and viewing our living spaces as a little more important. Is that fair?

[Liz Segran]
I'm a millennial. I'm 35 and I've definitely felt like buying home stuff was kind of a mark of sort of turning the corner... we might be getting to the point where millennials are now investing in property, right? So they've dropped all this money on a new house and so it just makes sense that they're going to invest in making it the nicest possible home..So yeah, I think that it's definitely a mark of becoming an adult.

[Mio Adilman]
On social media, this is called adulting. You see it everywhere. Posts, photos, videos of millennials holding up a purchase, or doing something that they hashtag “adulting”, proof that they are growing up.

And speaking of social media, Instagram especially, has had a huge impact on the role of bed sheets and duvets in our lives. I know that sounds funny, but it’s true.

[Liz Segran]
Instagram has become this really important means of communication and really important means of storytelling, especially for the Millennial generation and I think Gen Z as well more so than Facebook. What that means is that if you're constantly taking pictures of what you're up to in your life, your backdrop almost matters as much as what you're wearing. Often, you're taking pictures of yourself in your home. You're taking pictures of you know and now we're all nesting. You're taking pictures of your kids...and so suddenly, your home is being accessed by the world in a totally different way….Having new sheets, which you may not have replaced that frequently before, but having new sheets is a good way to have a different backdrop.

[Mio Adilman]
Basically what Liz is saying is that because we take so many selfies, often in our homes, our furniture becomes like a fashion accessory.

[Liz Segran]
Yeah. It's like not only are we trying to create these picture perfect selves and picture perfect lifestyles, we now have to create these picture perfect homes and these brands are aware of this and are helping us do that... They have gotten customers so excited about their brand that customers are actually coming back and creating linen closets full of different styles of Brooklinen sheets. They just changed the way that consumers buy sheets. Linen has now become the summer sheet. Brooklinen in particular developed this amazing twill, which is this very soft material that's really perfect for winter. That's really my favorite of all the Brooklinen sheets.

[Mio Adilman]
Bed sheets become fashion, and as you know, in fashion there are different seasons. Which has me scrambling because in my house the only season, if you wanna call it that, is laundry season.

Anyway, Brooklinen definitely disrupted the bed room, and pretty soon it wasn’t just millennials sleeping on its now different kinds of sheets. And pillows. And duvets. Blankets. Business took off. But remember, this company was bootstrapped. It was Rich and Vicki managing everything for at least the first year.

[Rich Fulop]
I did the first 5,000 customer service tickets and I got to speak one by one to our first five thousand prospects and customers. And it taught me a lot about what they wanted, what they expected, what they were asking for. It taught me how to communicate.I was very, very fortunate about the fact that I didn't know how macros work in this so I wrote out every single email. And I wrote it from the point like I was writing you an email or a friend or my brother or whoever it is. And I would say, Hey Mio, I hope you love the sheets. Did the package get to you on time? And like in long form and people love that because then they'd give me feedback. Any questions let me know. And they'd be like yeah, actually the box was a little dented. You guys should probably invest in a thicker cardboard or something. You take these things and you hear that three times and then you upgrade the cardboard. Solved that problem, right?...Or I have a king size bed which is 76 by 80 inches and I really hate that I put it on the wrong way and I don't want to rip it. So we put little tags that say short side/long side in it.

[Mio Adilman]
I really identified with that story about the long way and the short way because I've had more temper tantrums in the privacy, when nobody else was around in my house.

[Rich Fulop]
Then you gotta go do it all over again...

[Mio Adilman]
No, I lose my mind. I start talking to my bed and the beddings and I'm like why do I even put this stuff on? It just ... and why hasn't somebody done this? It drives me absolutely crazy.

[Rich Fulop]
People have their comforters shuffling around inside the duvet cover so we put little …

[Mio Adilman]
Oh, that drives me nuts. You have anchors?

[Rich Fulop]
We have anchors in the corners so it doesn't wiggle around. It stays put.

[Mio Adilman]
Mio: That drives me nuts.

[Rich Fulop]
Our product is not exactly the same as when we started because we have this hotline directly to the customer, and they can tell us it's too this, it's too that. Can you make this? And we try to iterate as fast as we can to react and make sure they're satisfied.

[Mio Adilman]
This relationship reinforced the role of customer experience for Rich. A job he only handed over after two years of also running the company.

[Rich Fulop]
Having people wait days for a response, it was just painful to see their second or third time they would write in and say no one's gotten back to me… and you work so hard to bring people into the website and to explain to them what you do and to hopefully make the sale. That to lose them on a terrible CX experience, it was just not something I could stomach anymore. So we over invested in this...First it was just email. And then, it was email and chat. Then, it was email, chat, and phone. Now it's email, chat, phone, and text messages.

[Mio Adilman]
When I was on the site, as I started browsing, a customer service rep popped up in chat to ask if I was finding everything okay. Now, I know Brooklinen isn’t the only one doing this, but it felt like a living breathing retail experience.

And in a weird way retail is on the minds of the major direct-to-consumer brands, because we are in the middle of another generational shift when it comes to customer preferences.

[Liz Segran]
I think that actually what we're seeing now is that millennials had a very, very particular ability to purchase products online without seeing them. The generation after them actually wants to test out and see these products. The brick and mortar store seems to be coming back.

[Mio Adilman]
But unlike brick and mortar before, the stores are sometimes serving a different purpose.

[Liz Segran]
When you go to an Away suitcase pop-up, it's not about selling you a suitcase. They might not even be pushing the suitcase on you, it's about travel and excitement and all of that. The next you're thinking about buying luggage, you'll think about Away.

[Mio Adilman]
Same with Warby Parker, Casper and others. The idea seems to be a store where you can try stuff on, even if you’re still gonna buy it online later.

[Rich Fulop]
It's something that's on our radar. But we're a direct to consumer digital native company. I don't think there's a rush. We would very much like to master what we're doing which I feel like we haven't done yet before moving onto the next thing.

[Liz Segran]
Brooklinen has relative to a lot of other direct to consumer brands grown much slower and I think it's because of all the stuff that we're talking about, which is that they're really paying attention to who their customer is, what they want, tweaking and...basically creating more products that they're going to want.

[Rich Fulop]
They were asking us to go into towels. They trust us with fabrics and with their bedding. And it's something that was a natural foray for us to go from the bedroom to the bathroom.

[Mio Adilman]
How should towels feel on your hands?

[Rich Fulop]
How should they feel?

[Mio Adilman]
Yeah.

[Rich Fulop]
It depends. It's a personal experience. We have a superplush towel. That's personally what my wife and I liked. We didn't like those thin sandpaper towels. Right? We wanted something soft yet absorbent. Good cotton is the key for that and no chemicals on the outside that would repel that stuff.

[Mio Adilman]
And now, Rich doesn’t have to go running around some hotel in Las Vegas trying to buy great towels. Or bed sheets. It was easier to make them himself.

OK, you’ve been listening to Repeat Customer by Zendesk. A show about how customer-focused companies create great customer experiences. We post a new episode every two weeks.

If you're looking to elevate your company's customer service game, check out zendesk.com. Because the best customer experiences are built on Zendesk.

And you can learn more about this podcast at zendesk.com/repeatcustomer.

Thanks for listening.