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We Need a Warby Parker for Mattresses

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Re: We Need a Warby Parker for Mattresses

#91

Post by brigade »

MartinCron wrote: post #23

While you're disrupting the mattress industry, please consider re-thinking the King form factor. Changing the aspect ratio by just a few inches would make it perfectly square, which allows for you to rotate 90 degrees as well as flip, so the whole thing would wear out more evenly. As an extra bonus, this would make putting sheets on easier as there's no wrong way (short of inside-out, I guess).

Even before that, start making mattresses flippable again.

But a flippable + rotatable mattress means it could last decades, so of course it won't happen.

Re: We Need a Warby Parker for Mattresses

#92

Post by gknoy »

MartinCron wrote: post #38
twoodfin wrote: post #22

Earlier quoted context omitted.

The problem is that many people like to lie on a mattress before they buy it. Sure, that's a little silly since lying on it for a minute or so is unlikely to capture the experience of tossing and turning on it for a night, but it's clear that it's a competitive advantage to let the consumer compare a few models in a physically direct way. Warby Parker can get away with the similar consumer requirement for glasses bec…

I used to think the same thing about shoes, but Zappos has managed to crack that with their super-easy returns and two-way shipping. Is two-way shipping with easy returns possible for mattresses? I would be willing to try it if I never had to deal with a mattress salesman again.

With a memory foam mattress, they tend to be vacuum packed in a plastic sleeve and box that is nigh-impossible to ever fit it back in again. I suppose if you had a specialized team that could come to your home, repackage it, and take it away, it might work, but that doesn't sound like it would scale very well outside of a large city.

Re: We Need a Warby Parker for Mattresses

#93

Post by winterchil »

notJim wrote: post #67
rscale wrote: post #15

I believe that entrepreneurs could do well, generally, by looking for opportunities in industries that are dominated by private-equity players. If an industry is overweight PE, you can bet that the market analysis looks fantastically attractive (competition isn't too fierce, suppliers have little power, buyers have little power, not many substitutes, and little perceived threat from new entrants). If a clever entrepr…

Could someone explain for the… ahh… more financially naïve among us why private equity is the important signifier here? It seems like what rscale is talking about are markets which are opaque due to companies that have enough clout to force that inefficiency (e.g., by restricting information or making product comparisons impossible.) Why or how is that coordinated with private equity?

This is a brutal generalization so take it with some salt. I also don't subscribe to the "all PE guys are evil and unnecessary" philosophy but with just this teaser description it would be easy to think I support it. Anyway, on to your answer.

Private Equity firms typically want to run their portfolio companies as profitably as possible. This means cutting down service, R&D, technology, etc as lean as possible without damaging the existing product or brand.

It also rules out lots of room for innovation as the companies chief reason for existing becomes generating enough profits to pay off the individual company's outstanding debt.

Why is there debt? Private Equity firms will buy a company, streamline its operations, increase its profits, and demonstrate to banks/investors that it is financially stable. Once they've done that they raise lots of debt against the promise to pay off that debt with the future, dramatically increased, profits. They use the debt to pay themselves a bonus for taking over the company and fixing it.

Why not wait and just pocket the company's profits over time? Well, that's how Warren Buffet does it (sort of), but by loading the company with debt they get their bonus sooner increasing the IRR for their own investors.

edit: phrasing.

Re: We Need a Warby Parker for Mattresses

#94

Post by larrys »

Spooky23 wrote: post #42

There are all sorts of outlets for reasonably priced, what you see is what you get mattresses: Sam's Club. Costco. Ikea. You can get a decent name brand mainstream mattress for ~$500. The problem with mattresses is that it's a product where you need a salesman. There's a bunch of different products that look similar, but have significant differences. You want to match the customer with what they want (or tell them wh…

" dropped in an envelope and shipped to anywhere in a day or two"

Not to mention the ease of returning those eyeglasses should they not be to the customers liking.

Re: We Need a Warby Parker for Mattresses

#95

Post by melvinmt »

niggler wrote: post #33
startupfounder wrote: post #10

We need a Warby Parker for Diamonds! 1. Oligopoly market structure CHECK 2. Insane gross margins CHECK 3. Opaque and misleading product naming CHECK 4. Expensive distribution through unpleasant channels CHECK CHECK CHECK

Nice little history on Diamonds (and why trying to disrupt that market is incredibly difficult): http://www.theatlantic.com/magazine/print/1982/02/have-you-e...

Wow, one of the best articles that I've read in a while. Thanks.

Re: We Need a Warby Parker for Mattresses

#96

Post by larrys »

For reference, here is a publicly traded retail mattress seller and it doesn't appear from their profile that they manufacture but only resell:

http://finance.yahoo.com/q/ks?s=MFRM+Key+Statistics

Take note of the margins, this isn't Microsoft sized here.

They have almost 900 stores in 27 states.

The article therefore is based on the idea of manufacturing your own mattress and selling web based. Unfortunately this would require warehouses around the country and a manufacturing facility in this country to make the mattresses. Although I'm not sure, I would imagine it would not be cost effective to ship a mattress from China (although I guess Mexico is possible) because of the size and weight. So this is not selling sunglasses or fashion eyewear which can easily be manufactured overseas as well as easily shipped (and returned).

Re: We Need a Warby Parker for Mattresses

#97

Post by mmanfrin »

ktsmith wrote: post #86
mmanfrin wrote: post #77

Earlier quoted context omitted.

I think I'd find the guilt of knowing my mattress was made by slave labor to be a heavier price than the $1k in savings.

You might want to actually know what you are talking about before commenting. Inmates earn an hourly wage (not great), training on how to do the work, etc. The money they earn gets split up in a few different ways such as going to restitution if applicable and some is available for the inmates to spend at the canteen or save for when they get out.

In Nevada they earn 13 cents an hour.

http://prisonlaw.wordpress.com/2010/12/16/prison-labor-and-t...

That's slave labor.

Re: We Need a Warby Parker for Mattresses

#98

Post by qq66 »

MartinCron wrote: post #28
qq66 wrote: post #16

Earlier quoted context omitted.

The problem is that a diamond is inherently a basically worthless rock, so its retail value is already a figment of the public's imagination. Blue Nile is the closest that exists today, but they are not that disruptive since the retail channels already have lots of competition -- it's the supply (De Beers) that's monopolized.

The real disruption will come in the form of widely available manufactured (not mined) diamonds. I used to think of diamonds as basically worthless rocks, until I went shopping for an engagement ring stone and looked at them under the jeweler's microscope, and thought "I want to be dressed from head to toe in these things". With mass-produced diamonds, that may become a reality.

Yes, they're nice to look at, but unlike, say, emeralds, they're not very rare -- they're simply controlled by a monopoly supplier. Manufactured diamonds will bring back a competitive supply which would exist if there was a healthy assortment of companies in the diamond mining industry today.

I do question your judgment in wanting to cover yourself head to toe in diamonds :) Do you also want to drive this car? http://www.diamondvues.com/2007/04/check_out_this_diamond_st...

Re: We Need a Warby Parker for Mattresses

#99

Post by notJim »

marklabedz wrote: post #89
notJim wrote: post #67

Earlier quoted context omitted.

Could someone explain for the… ahh… more financially naïve among us why private equity is the important signifier here? It seems like what rscale is talking about are markets which are opaque due to companies that have enough clout to force that inefficiency (e.g., by restricting information or making product comparisons impossible.) Why or how is that coordinated with private equity?

At the risk of putting words in rscale's mouth, its not that PE creates these conditions or that PE is even necessary for these conditions. Instead, PE tends to find and play in highly attractive industries (See Porter's 5 Forces for a classic view of "attractiveness"). PE involvement in an industry can be a good signal...

Ahh, very cool. That makes a lot of sense to me. Basically you're using PE as a proxy for a measurement of attractiveness.

Re: We Need a Warby Parker for Mattresses

#100

Post by joshu »

rscale wrote: post #15

I believe that entrepreneurs could do well, generally, by looking for opportunities in industries that are dominated by private-equity players. If an industry is overweight PE, you can bet that the market analysis looks fantastically attractive (competition isn't too fierce, suppliers have little power, buyers have little power, not many substitutes, and little perceived threat from new entrants). If a clever entrepr…

huh. clever thought.
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