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June 8, 2023

How Saatva Disrupted the Mattress Industry and Built a $400M Brand with Ricky Joshi — EP 028

Ricky Joshi

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Adam Robinson: Hello, everybody. I'm very excited to have Ricky Joshi with me. He's got a very exciting company, a very exciting time. And we're going to talk about expanding into physical retail, which I am sure every single one of the listeners is curious about and planning to do at some point. Product mix extending AOV. Super excited. But first, a little about Ricky. He co-founded Saatva, a vertically integrated e-commerce luxury mattress and bedroom company. Saatva was placed on the Inc 500 from 2015 to 2018, also named the seventh fastest-growing privately held retailer in America. And I read something else, it said Warby Parker was eighth, right? Like you guys crushed them. The Dollar Shave Club was one. I mean that thing was really good. Saatva takes a very traditional and inefficient business to replace it with a digitally native business model with stores augmenting our digital efforts, which we're going to talk about today, but operating more efficiently.

Saatva is able to offer an ultra-luxury premium, eco-friendly mattresses for half the price of competitors. Saatva is also the best-reviewed mattress on Google with over 30,000 5-star reviews. Saatva is currently launching about one store a month in major cities, including NYC, D.C., L.A., San Francisco, Chicago, Dallas, Boston, and Seattle. Ricky, thank you for joining us. Cannot wait to chat about this stuff.

Ricky Joshi: Yeah. No, excited to be here.

Adam Robinson: So, let's just start with like what we were talking about right before we talked. So, you're like the only thing I'm not going to be able to talk about is attribution. And I told you, like, I just heard of this like marketing efficiency ratio. It's like a whole revenue over a whole spend and thinking about your business that way. And you're like, “We've been doing that from day one.” So, can you talk about looking at your company like that, how you actually make decisions cross-channel, and how that led you to expanding to physical retail?

Ricky Joshi: So, basically, marketing efficiency ratio has been kind of again, a hallmark of everything that we've done from the beginning and even to this day, I'm looking at that number. You know, I uncovered very recently that we are more efficient in certain areas than other areas. And just basically told my team, “Let’s press the gas in areas we’re more efficient.”

Adam Robinson: Not to cut you off but those areas were the areas where you had physical retail.

Ricky Joshi: Yeah. So, basically, we're more efficient in these areas where we have stores. We should be spending more in these places where we have stores. So, that's always a market efficiency ratio is something that, again, has been what we've been doing from the beginning. Every time we find a nugget, an area where we're more efficient, we try to double down on it. You know, I think testing and experimentation has been a part of the core of this company from day one. So, if we find an opportunity, we look for it, we seek it out, and then we'll press the gas to make it work. And a lot of times it does work and when it doesn't work, no big deal. We'll try something else. But, yeah, that's exactly how we've been doing it.

Adam Robinson: So, can we just go timeline on this physical retail? Let's see, you started the company almost 13 years ago. Was it all e-commerce at first and then you decided to go to…

Ricky Joshi: Yeah, 100% e-commerce and the phone. I think with such a high AOV product like ours, phone orders have actually always been highly converting orders for us. We've had 24/7 customer service from the beginning. Believe it or not, I think now the secret's out but for a while our competitors would be open from like 9 to 5 Eastern Time and we're open 24 hours. And I thought it was kind of crazy that they weren't open longer when we're converting so much. I mean, how much does a few customer service reps really cost versus the amount of orders we're getting and we're getting them at 1 in the morning, whatever. So, phone is actually a big part of it as well in the beginning. So, the stores have been a relatively recent phenomenon. Our first one actually happened right before COVID. So, that was December 2019. We decided to open one in New York City. That store by the way…

Yeah. You know, it's interesting. So, out of the gate, it did really well. Obviously, COVID happened and we had to kind of, you know, we throttled it but people were coming in with their masks on. I mean, it actually was fine over COVID, and then kind of towards 2021 just kind of started skyrocketing. That store now is, I believe, one of the probably highest-grossing mattress retail stores in the world, doing north of $10 million out of that four-walled location alone, which is pretty remarkable. And I think it says a lot to our digital strategy and really we have become a truly omnichannel brand where I think digital and physical are kind of go hand-in-hand and really in sync. And I think that's a huge competitive advantage in terms of stores, given the success of the first one over the last few years. So, since 2020 basically, the last three years, we rolled out ten more. So, we're now at 11. But rolling out one every month, month-and-a-half, two months or so. So, three more right now in construction. So, yeah, then a few new leases were just signed. So, we're moving every year doing anywhere from 8 to 12. So, really, really exciting. And we're excited to chase after these kind of great markets and they've been overperforming. So, we're excited.

Adam Robinson: Yeah. So, I'm a guy who doesn't have a store, doesn't have an office, and doesn't sell physical products. What do you do when you're like it's time to test retail? Is there a guy you call? Is there a consultant? Like, you guys have never done this before, right? You know what I mean? What bridges the gap between an e-commerce company and an e-commerce company that also…

Ricky Joshi: So, I'm actually very fortunate that my business partner and one of our co-founders and CEO has extensive retail experience. So, he actually opened up 200 and something Jennifer Furniture Stores. So, he is the founder of Jennifer. So, he had the experience but actually, it's really interesting in that this is a very, very different operation than Jennifer. So, I actually went out and interviewed a lot of VPs of Real Estate to find our VP of Real Estate. And we ended up with, I think, just a great team member, Chad, who has really kind of run the architecture construction portion of this. But yeah, it's an all-hands-on-deck effort. You know, I think our first version, the New York version, was a little wonkier than today's current iteration in every respect from technology to tracking to everything, but kind of very similar to the way we do the Internet, right? You kind of put your foot out there and see how it works and if you're on solid ground or not and just kind of keep moving.

Yeah. And the one thing I think is a super advantage for an e-commerce operation going to retail is retail is a lot simpler than it was back before things like Square and there were complex POS systems and technology which is a lot heavier and bigger. Now, really the store is an extension of our website. So, for the most part, we're actually using the same POS as anyone on the website. So, it's super simple. And then we've done I think some really unique things to make the stores we call viewing rooms work so showroom viewing rooms but yeah.

Adam Robinson: What are they specifically?

Ricky Joshi: So, I think one thing that's been really interesting, there's been, actually this is a kind of a COVID realization. So, we shifted our customer service or org from a big office space on the outskirts of New York City to full remote. And we noticed that actually our full remote team members were performing just as well as they were when they were all in the same office, if not better actually. The metrics actually were starting to look a little better. So, then we kind of had this realization. Why would we have all of these kind of customer service reps centralized in one area when every time we open up a retail location, we can actually kind of have a mini customer service hub there. It does a bunch of things. One, we're not paying for separate staff to man the store. Two, there's a little hub of activity there, so it's like a little bit of a local culture and you walk in and there's four or five people, they’re getting coffee. It creates kind of a little bit of a fun environment and a little bit of like just a little more noise and a little more activity in the store. It's not like the guy and I hate to pick on our competitor, but you walk into like a mattress firm, right, there's the one guy sitting there on his phone and had been so bored all day.

Adam Robinson: Just salivating, right? He's like looking at your neck and drooling, like about to put his teeth in.

Ricky Joshi: Yeah. You walk in just, you know. Yeah. So, we kind of wanted to avoid that, and I think this actually handled that really well too. And then also really great for different traffic flows. You know, our New York store did almost $200,000 on Memorial Day, just out of one store alone, which is these are incredible numbers. And there are just so many people in there, right? I mean, think about the number of orders that had to happen to make that totally work. And so, I think, anyway, long story short, it was great having six or seven people in there to handle it. But when there's like two or three people then they're just manning the phones and also productive so absolutely it works.

Adam Robinson: That is an innovative idea. If you're opening physical retail, also have it be a customer success hub.

Ricky Joshi: Yeah, using physical retail as a customer service hub.

Adam Robinson: Are there any other like things? So, you mentioned that the New York store is wonky compared to the current iteration. Like, are there any other things that you're like, “Man, now that I know?”

Ricky Joshi: So, it was wonky. Now, it's better.

Adam Robinson: Yeah. There's things about being an entrepreneur that I tell everybody who's about to be an entrepreneur. I'm like, “Don't create an entity until you know you have a business. Otherwise, you're just like paying these fees and doing these processes.” You know what I mean? Just like stupid stuff like that. Like, don't get ahead of yourself. Try to spend as little money as possible. Is there anything about going through this motion of creating retail that you're like, “Oh, man, that was like…”? Well, you said you had a co-founder that had opened 200 stores and maybe not.

Ricky Joshi: You know, it's interesting, though, Times have changed, right? So, even though he's opened up 200 stores, I think our digital-first philosophy really carried over to retail. So, incredibly data-driven from day one. So, we're tracking sales. We were totally aware of local sales. And looking at the lift overall both from a zip code perspective, what's lift looked like in kind of the near vicinity to the store as well as the overall digital marketing area, the DMA metro area. So, from an analytics perspective, I think far more sophisticated than a traditional retailer. In terms of technology in-store, actually relatively simple. Again, we didn't have a complex POS system. You're really just transacting on the website. So, that made it relatively easy. On the construction side, which was a gap, we found a really great person to lead that effort who really understood leases, construction, all of that, and has done it before. So, Chad has done this for great brands, Sonos, etcetera. So, brought that person in, and then I led a lot of the location selection and a lot of that was the data-driven thing as well.

And there's a way to kind of do it. You know, we also have engaged a master broker who Chad knew from his previous life. And so, the master broker, Greg, is that he was able to kind of go in and locally hunt and throw locations at us. We're mapping the potential locations against our data. And then there's some, I mean, honestly, just like good business sense, believe it or not. I learned it on the fly. You know, I think a good location kind of hits, number one, there's where are you doing it on the national chess board, right? So, where are you? Where is it? Is it Seattle? Is it Denver, whatever? So, we have a priority list. A lot of that is based on e-commerce revenue. We have a…

Adam Robinson: Your existing e-commerce revenue.

Ricky Joshi: Existing e-commerce revenue, yeah. And that's worked, right? So, we're double downing on the areas where we're already successful. I think there are some who would advocate, "Hey, like go somewhere that you're not as successful. Maybe you'll see a lift,” and that's just not been the strategy. The strategy is if they like us online, most likely they're going to like us in physical retail as well. It's a good demographic fit. But we are looking at the demographics as well. We tend to kind of go in line, though, and then we also will look at our conversion rates as well. So, that's another factor. So, there are some outliers that seem to be converting really well. Maybe they're smaller cities with lower revenue but super high conversion. So, those are places that I think also kind of pop up. Then once that's kind of constructed that map is constructed, then it's a little more of a balance between art and science. We look at kind of radius is around sales. So, if we have a certain pin drop, what are the sales look like for our existing sales in that location versus another one? And then there's other kind of intangible factors which I've gotten to know super well, like what's the visibility, what's the walkability, things like that. So, learning it all but it's actually really fun stuff. I don't know. Either I'm like totally diluted and I think it's fun but it's actually not fun or it’s actually fun.

Adam Robinson: Certainly, it's like a new challenge, right? I totally get that. It's like you're evolving as a person into like and your business is like this new thing that it wasn't before, which is…

Ricky Joshi: I mean, if you like real estate like I've always loved real estate in general like real estate can be slightly frustrating. I think one frustration point, for example, is we are getting fantastic locations around the country. So, we're like front and center Flatiron, New York City. I'm super excited about that. Our DC is at 14th and it’s just in an awesome kind of cool part of town, Newbury Street in Boston. I mean, I can go on and on. And yet in my hometown of Austin, like, I'm struggling to find a good spot. So, we'll see.

Adam Robinson: You’re going to go to The Domain. Where are you going to go?

Ricky Joshi: Yeah. Real estate can be frustrating and it's interesting and you're kind of at the behest of an individual landlord. And so, yeah, it is what it is anyway.

Adam Robinson: So, you don't have a store here yet?

Ricky Joshi: We don't, no. Looking. One, we just had something pop up yesterday that looks super interesting, but yeah, none here.

Adam Robinson: Where? Is it like Music Avenue or something or what?

Ricky Joshi: It's actually on Barton like just right Barton Hills Drive kind of. Oh, not Barton. Barton Springs Road.

Adam Robinson: Yeah. Sweet. That's great. I mean, right in the thick of it.

Ricky Joshi: Yeah, 100%.

Adam Robinson: Cool. So, one thing as you were saying all this, I'm trying to envision myself being like a typical sort of kind of single product Shopify Plus guy who's like wanting to do this at some point, like Warby did, like you did. When am I ready? You know, how did you know that it was time? And do you think that you waited too long because you got a ton of revenue, several hundred million, right? 400 million or something before you started this?

Ricky Joshi: Yeah. We were right in that range. And so, yeah, I mean, I think you're always looking to grow, right? One thing I've always kind of thought is you don't want to throw out every card that you have right out of the gate, right? Like number one, it's too much. Attribution’s an issue. You don't know where your revenue is coming from. Hard to track things when too many things are going on. So, we've always had like really nice, steady, I mean, maybe exponential growth, to be honest, but controlled growth to some degree. And there's just a certain time when we're thinking, okay, we've built this amazing kind of relatively simple. So, we started off as a one-product company too with one mattress. Our second product was, so we started in 2011, our second product didn’t launch until 2014. So, we were an innerspring mattress first and then we had our memory foam, 2014, then 2016 we had our third and then it kind of went up super quickly.

But basically, there was a certain time we just felt that to really, really keep driving this thing, to leverage the size of this ship the best way, retail made sense. And I think part of it also comes down to the fact that, and this is a major part of our calculus. We're spending a certain amount in every single U.S. city, every single market, and still two-thirds of those people want to try out the physical product. And so, two-thirds of my marketing budget is totally wasted, basically, if I don't have physical presence. And there's a certain point when you become big enough that that's big enough to almost, that loss and conversion is almost big enough to justify rent.

Adam Robinson: Right. Yeah. So, I think if you're feeling like you're getting close to that.

Ricky Joshi: Yeah.

Adam Robinson: And it might be different for… Well yeah, I don't know but like I mentioned that I knew that if I were a guy who's here, right? Like, I don't know. People may want to try out these sunglasses. I don't know.

Ricky Joshi: Yeah. I mean, I think it was, right, look anything else. I mean, it's all Internet marketing and looking at the data I think is huge. So, are there certain places where you have super high conversion rates? Are there certain places where your sales exceed what the population numbers look like? You know, I think double down in places that like you. And that's what we're doing. So, if I look at the top 20 markets that we're pursuing, I mean, these are our highest revenue markets and super high converting markets. I mean, we have a couple that we haven't found yet, Austin being one of them. Austin's an anomaly, way outperformed, punches above its weight for its size. So, our conversion rate in Austin's amazing, punches way above its weight again in terms of revenue but we haven't found the location yet and we're not willing to pay Manhattan prices. So, basically…

Adam Robinson: Yeah. Isn’t that crazy?

Ricky Joshi: Yeah. It is crazy. So, you have to find, you know, again, it's a balance and I think it's just kind of a, you know, just like anything internet marketing and test experiment, you have some wins, some places we get great rent and are super cheap and just absolutely crush it. The City of Chicago from a real estate perspective, super inexpensive, high performing. Yeah, we're going to have a second one there soon. So, yeah, and it is what it is. You know, Chicago's relatively inexpensive for some reason, but also Chicago is relatively inexpensive in a lot of ways, right? So, yeah.

Adam Robinson: Yeah. Other real estate is less expensive.

Ricky Joshi: Other real estate as well.

Adam Robinson: Mega discount to Manhattan or whatever. Austin's a strange one. It's just like there's pockets that are so expensive and then you go out it's like, yeah. It’s just so weird.

Ricky Joshi: Yeah. Austin’s really big cliffs, too, right? That’s I think part of the issue. I mean, to be totally honest, I think what's happened to Austin is Austin's become a very desirable market in a, well, we're aware of how cool Austin was a while ago. I mean, we were early on that. I think the secret's out now and so all of a sudden there's a lot of retail wants to be in Austin. People realize there's benefits that are kind of intangible. There's a lot of awareness, benefits. You know, people come here as tourists, a lot is tourist destination. There's a lot of reasons to be here and there just wasn't the physical retail presence before. So, we just don't have retail zones and retail districts the way that other cities do. And so, we're building into it. There's a lot of new construction to, I think, address this. And people obviously see the opportunity. But we're a couple of years away, so there's just a scarcity of space and it's not unique to Austin. Tampa is another city where we kind of had a little bit of an issue finding a location. Finally found an amazing spot and a brand new development that was being built to basically address the need in Tampa.

But Tampa is another city that grew really, really fast, particularly over COVID and all of a sudden became kind of got on the map. So, we see, yeah, these things are happening in certain places. On the other hand, by the way, traditional retail opportunities and vacancies are relatively frequent in some of the bigger cities. So, where consumers left San Francisco in particular, right? So, San Francisco, there's a lot of vacancy downtown but even in New York in Chicago, like there's a lot of the big cities have space. So, yeah, it's always a moving target but I guess it's an exciting challenge.

Adam Robinson: Totally. How do you fund this? It’s just with cash flow?

Ricky Joshi: Yeah. I think cash flow has been a huge part of our story. And we bootstrapped the business from zero to I think when we did our first private equity round and that was more just to fuel some growth but that was in 2018. We're already doing close to 200 million in revenue.

Adam Robinson: Yeah. Congratulations. Inspired to be like that.

Ricky Joshi: Yeah. No, it works and it has worked. And so, yeah, we've always been really cash flow focused. I think one thing about the company is we've been such a data-driven, efficiency-focused Internet marketing-led company now. Now, we've become kind of a brand and we do a lot of the brand stuff too but that goes hand in hand with our Internet marketing focus and because of our, I think, disciplined approach and being a bootstrap company from day one, this is an approach that test and experiment. I wasn't nervous to try things out but cash flow has been a huge part of our story and we keep funding everything through cash flow.

Adam Robinson: Dude, that’s incredible. Amazing. Have any of these stores flat out not worked or is it still…?

Ricky Joshi: You know, I think honestly, almost every one of them is hitting the numbers we'd like it to hit. So, overall, so far, so good. I think one thing that was sort of told to me by another retailer. The first 10 to 15 are pretty easy. So, it's really hard to screw up like a Dallas or whatever, DC. So, I think it's going to get a little more interesting as we go down the list but, honestly, like even our Charlotte store, which is kind of a smaller market for us is really pulling up some pretty good numbers and outperforming what we thought it would do. And that really we think bodes well for kind of that subset of cities in that population range. So, we're actually really excited about Charlotte's performance and what that kind of bodes for the future and that sort of sized city. And we have a bunch that we're looking at. So, Nashville, Raleigh, etcetera, Austin.

Adam Robinson: So, are you international at all or is it just straight-up US?

Ricky Joshi: No, we are not international.

Adam Robinson: Yeah. Us, neither.

Ricky Joshi: Yeah, we've been asked. It's interesting. You and I sometimes go to the same conferences and there's always an international opportunity and we see the international opportunity. But I think we really want to have a buttoned-up business and we're in growth mode. We're still doing a lot of things here. I think international brings new complexity in a lot of ways, everything from finances and the financial systems to language. There's opportunity there. I think it's a lot of work. Also, with our sort of production style, which is we're not a bed in a box. We are a real mattress that's hand-delivered. We remove your old mattress, all white glove delivery. So, that's something that's just harder to replicate internationally. You know, the logistics it was just an amazing furniture, mattress, bedding brand but we're also a logistics company at this point. You know, we produce out of 18 factories. We have 160 distribution centers that are all managed by our software. So, it's a very involved process, I think.

Adam Robinson: Yeah. That's incredible, man. Talk to me about AOV and growing it and sort of like how you think about that as it pertains to the rest of this stuff.

Ricky Joshi: Yeah. I think AOV has been a major driver to our growth. We've basically doubled AOV over the course of our history, and a lot of that's been add-on product. So, multiple buys and add-on. And so, we started kind of slowly. So, our first kind of foray into kind of answering products was sheets, pretty soon became a line of sheets, became bedding, really became built out of an entire bedding apparatus. So, we have everything with blankets to quilts to duvets, all kind of very much in line with the kind of the Saatva ethos so all eco-friendly that’s not chemically driven, all those things, using organic cotton. And then we kind of moved a little bit into furniture. So, we always sold foundations and frames and our selling headboards, beautiful bed frames. Now, we actually sell bedroom chairs, soon-to-be rugs. So, really trying to become a one-stop shop for the bedroom. And that means everything from beautiful furniture to beautiful bedding to the mattress itself. And when you go to a nice hotel, I think there's a certain way that that experience feels. And we feel that everything you get from that experience, we'd like to basically offer our customers.

And a lot of times I remember in the beginning, to be honest, people would ask like, "Okay. Love the mattress. Where do I buy sheets? Where do I buy pillows?” And we were always just referring customers out to other brands, getting nothing for it, by the way. Just places we liked. And yeah, so there's no reason to not capture that opportunity for us. I think to us too, to be honest, strength is a brand story. So, yeah, I think it's a brand enhancement.

Adam Robinson: Yeah. The opportunity just seems massive. You know, I'm sure you're just sitting there like, “Oh, yeah, there's so much more we can do.”

Ricky Joshi: Yeah. I mean, we're always looking at scaling a product, right? So, actually, I have a call tomorrow talking about a totally new vertical. And so, so far we're in the fun zone right now of product expansion.


Adam Robinson: Yeah. Eventually, that was going to be one of my questions like at what point does this become so hard to manage, like whatever it is, inventory or like logistically like product line?

Ricky Joshi: Yeah. Right now, I think we have a nice operation where some stuff is drop ship. Some stuff just goes in line with our white glove deliveries. So far, inventory hasn't been that much of an issue. I think there's a certain point with furniture where you can go probably too far down the road. So, we're trying to be lean and just kind of the same way we have I think the best, best-in-class product for our mattresses, having this best-in-class product and some of these furniture categories I think is very, very important. But yeah, there's a certain point where I think product expansion is no longer going to be sort of a huge growth driver for the business, but it still is right now. So, I think every company as a lifecycle, every direct-to-consumer kind of brand is a lifecycle and at least a growth cycle. And so, obviously like there's always a million things you can do to iterate on the web and to make an experience better. I mean, I remember little things like when we were first starting out, like adding PayPal. I mean, now that stuff's super commonplace in Shopify but making sure that conversion rates were high on-site, testing out discounts, doing things like that.

Then you kind of see, okay, are there more products we can add to kind of capture revenue that we're losing to people who are going and buying these products anyway? So, I think product growth is a huge pillar. For us, retail has been a pillar just because at least in our category a lot of people do want to test, try out, and feel the product. It might not be as great for other product categories. I think one thing retail makes so much sense for us is we don't have - even in spite of new product additions, we're relatively simple on our inventory. Our inventory doesn't change that much and our product selection doesn't change that much. So, we're not dealing with thousands of SKUs that are constantly changing.

Adam Robinson: Yeah. Fast fashion or whatever.

Ricky Joshi: Yeah. Fast fashion, new styles. So, retail is not nearly as risky for us, I think, as some of those exactly fast fashion type companies where they have to all of a sudden ride the cycle of inventory and do all of that. You know, when you go in our store and our viewing room and you buy a product, it's still going through the same logistics it would otherwise. So, it's the same delivery person. Really, it’s just a physical extension of our website and you're sitting there and you're hanging 100 T-shirts or doing whatever, I think it becomes a little more difficult. There are some advantages. I think one thing that is a little more difficult for us is we are somewhat limited in terms of the number of locations we can have, particularly premier locations because we have more of a square-foot need. So, we need to be at least 3,000 square feet to showcase our product.

Adam Robinson: Just like do the mattress, yeah.

Ricky Joshi: Yeah. We can't just stick in like a corner of South Congress. It's like 800 square feet and do that all day long. So, every business I think has its pluses and minuses. And I think you just have to kind of deal with them and be as smart as you possibly can be.

Adam Robinson: So, how many stores, fast forward five years, how many stores you guys have now? And how many stores you think you'll have in five years?

Ricky Joshi: So, we have 11 right now, five in the works at various degrees of build and development. We just launched two last month and the five are in construction basically. Hoping to do, I think within five years, you know, I think our number should be probably 50 or 60 with maybe another 30 or 40 to go. So, we'll continue to do, at least for now, because obviously this is being paid for out of cash flow. So, yeah, like one a month is pretty good. I mean, actually, one every month and a half, once every two months in some cases. But basically, yeah, we like our pace and so, yeah, I think we're just going to keep going down our pace. And it's interesting the pace we're going out I think also just fits the size of the team and their ability to execute and also just kind of availability too, right? I think when you go too fast and we've seen some competitors go really, really quickly sign a lot of leases, some of them very expensive leases, some of them not necessarily.

Adam Robinson: I think I know who you're talking about. I was going to ask you about, like, how do you think about yourself versus them?

Ricky Joshi: Yeah. I mean, I think we're just like we're a lot more careful. You’ve also seen some of our competitor businesses. I mean, the stock goes like this and it goes like this then it tanks and they have to be taken private and we've just been like running a really clean, nice business.

Adam Robinson: I love that. As a fellow bootstrapper, it’s just like nothing makes me happier. It's like let them go up and down. It's like give me with a steady upswing, right?

Ricky Joshi: Steady upswing, being smart every day, running it like I would be running my own lemonade stand like being careful, being smart, I think not being reckless at all. And I think the business is thriving because of it. I mean still we're a growing brand in a downturn and we continue to grow and outpace, I think, any of our competitor's growth by a significant margin and profitably which no one else is doing either. So, I think, it’s a very unique story in direct-to-consumer in general and definitely the outlier in the mattress category.

Adam Robinson: Yeah. I mean, if any investors are listening, you just said the magic words for these days, right?

Ricky Joshi: Right. But it's interesting, by the way, we always had this focus, right, cash flow orientation, making sure that we were having positive EBITDA. And part of this comes back to like lessons I personally had felt from the past where the speculative overspending, non-profitable companies, I think they get in more trouble in downturns. And so, we still have like really nice growth when things were good. We just never started to spend money in places we didn't see like ROI basically. And now in a downturn, we're still kind of doing what we were doing before too. So, we kind of have been sticking to our game plan, which is be profitable, be smart, be disciplined, test new stuff, always look at the data. It's kind of who we've been and there are some other brands out there who will go in they'll spend all this money on awareness but they may not be able to track. I think awareness is part of our NPR where we're in a lot of places, but we also have a really, really strong kind of digital marketing backbone. And I think that's why the company has been able to be successful.

Adam Robinson: Totally. It's like if you're 80% digital marketing that you can track and 20% awareness, you're probably not going to ever change that. Whereas if you're 80% awareness and 20% digital marketer that you can track, when things get rough, you're cutting that, you're changing your operation entirely, right? There's just nobody you can keep doing the awareness sh*t when stuff sort of gets shaky.

Ricky Joshi: Yeah. And I think a lot of those companies never really have a great performance marketing practice internally. So, that's where you get a little bit in trouble. And I think what happens is during bad times everything gets cut, right? So, they're just like, "We're just not spending money on retail.”

Adam Robinson: Yeah. Morale goes to the sh*tter. You don’t get good employees anymore. It's just like a whole different cycle.

Ricky Joshi: Different, different, different type. Yeah, 100%.

Adam Robinson: I mean, I love building businesses how you are. It's even crazier in tech, right? Like recently the last several years direct-to-consumers were behaving that way also but like tech has kind of always been that way. It's like insanity that you're like, “I want to have a high-growth and profitable tech company.” People are like, they think it's impossible. They’re like, "Well, that's never been done before.” It's like, well, MailChimp did it like, I don't know, for $12 billion. Like, it's possible, right? You know, you may do it a little bit differently than everybody else, but.

Ricky Joshi: Yeah, and actually, I think our hometown of Austin actually has been kind of a little bit at the forefront of that. So, probably a little more careful, a little more profit-centered than some of the Silicon Valley, you know? Yeah. Money-losing operations. But I think in D2C particularly, I've always felt that with direct-to-consumer brands, these aren't software companies so losing money hand-over-fist to me I get the software company thing to some degree and that would be one day all of a sudden, boom, you see economies of scale and then like you're just this massively profitable company. But in direct-to-consumer, I've always felt if you don't have the unit economics correct kind of in the beginning, you're just like kind of driving faster into they're on the wrong road, right? So, yeah, doesn't make sense.

Adam Robinson: Dude, this was awesome. Last question, are you seeing any economic slowdown whatsoever in your audience of customers?

Ricky Joshi: 100%. Yeah. I mean, our market's down so we're…

Adam Robinson: How hard is it down? Like, what is it?

Ricky Joshi: So, at one point, I'd say it was down like 20-something percent, our category. I think our category is now down year-over-year maybe like 10% but also 22 comps are easier to benchmark against. But I think from peak, I'm probably down somewhere between 10% and 20%.

Adam Robinson: But peak was like insanity, right?

Ricky Joshi: Peak was like 2021.

Adam Robinson: Yeah, the best ever.

Ricky Joshi: Amazing. Yeah. So, call it 15%, 20% down from absolutely amazing. And our category obviously, I mean, was a big beneficiary of comp spending. So, there is a big push towards home furnishings. People are spending money, they're buying houses, and they kind of have stopped. Yeah, they've kind of stopped doing that as much. So, we're just continuing to do what we do, which is building a great business in spite of the environment. And again, we'll have our highest revenue year ever in a recession. So, pretty good.

Adam Robinson: Dude, I love that. My COO always says recessions are the best time to grow, right? If you can manage to do that, you're in a pretty great spot. I was talking specifically about like April and May were hard for us. Dude, like very recently, have you sort of felt anything? Or like, I don't know.

Ricky Joshi: Honestly, it’s like April was maybe a little slower but, yeah, May turned out to be okay. Turned out pretty good.

Adam Robinson: Rock and roll, man. Well, thank you very much. If people want to follow you or find you or contact you, are you on any of these social platforms doing anything or is it just like head down cranking?

Ricky Joshi: You know, I'm on everywhere except Twitter. So, like on LinkedIn, you know, Facebook, Instagram, whatever but LinkedIn's probably the best way to get hold of me. I keep thinking about the Twitter thing, but then like, you know. Maybe I'm like joining a sinking ship too late. I don't know.

Adam Robinson: Yeah, I'm wrestling with it as well. I think I have to do it because so much of this like Shopify Plus universe, I don't even think these guys work. They just sit on Twitter all day and talk to each other. So, I think literally for sales, I need to like figure out how to do it. It's not going to be me sitting there all day but I need a mechanism to sort of create awareness in that world, which I'm working on. Yeah, I hear you. So, I do a lot on LinkedIn. Do you know this? I made a docu-series about my company at six people in September and now we're like sort of basically the claim that I made is we're going to be a unicorn in 12 months. So, I'm making a weekly… It's pretty good. I'll send it to you. It's like being in the middle of the sh*tstorm as it's happening or whatever, and it's doing a really good job with it. But the interesting thing to me about LinkedIn was only 1% of active people on the platform create content, which Twitter, it's 100% of them do. So, there's this like imbalance of supply and demand with content, which I got convinced to start doing stuff on LinkedIn first. But like I think our audience is sort of more on Twitter for what we do. Anyway, dude, Ricky, thank you so much for taking the time.

Ricky Joshi: Yeah. Thank you, Adam. I really appreciate it.

Adam Robinson: It’s such an interesting topic. It's such an interesting time because you sort of just started it and like are going hard at it. So, congratulations on everything. Love what you're doing, love how you're doing it, especially the ethos is very in line with the values of our company too. So, rock on, man.

Ricky Joshi: Cool. Awesome. Well, thank you so much, man.

Adam Robinson: Cool.


Entrepreneurs often follow a simple code: zig while others zag.

So while the DTC mattress industry adopted the online “bed-in-a-box” model, Saatva co-founder Ricky Joshi took a different approach, prioritizing white glove delivery, 24/7 customer service and brick-and-mortar storefronts to build a $400M mattress giant.

In this episode, Ricky tells the story of how Saatva became the seventh-fastest-growing privately held retailer in the U.S. by branching beyond e-commerce and embracing physical retail.

In addition to the story behind Saatva’s growth, you’ll hear Ricky share insights on how he assesses which cities to open stores in, how to determine whether or not to add new product lines, and how Saatva has embraced different verticals to 2x their Average Order Value without losing the customer service touch that helped build their success.

Key Takeaways with Ricky Joshi

  • 00:00 How Ricky uses the marketing efficiency ratio to determine where to double down in his business.
  • 05:49 The one “super advantage” that e-commerce brands looking to go into retail can latch onto.
  • 08:03 How using physical retail stores as a customer service hub can help companies get a leg up on their competition.
  • 10:41 What are the factors to consider when determining which locations to open a retail store in?
  • 16:27 How do you know when it’s time to take the leap to scaling?
  • 24:51 Why hasn’t Saatva chosen to expand internationally despite their U.S. success?
  • 26:15 How Saatva has doubled its Average Order Value over the course of its growth.
  • 28:53 How can retail companies manage the simultaneous challenges of logistics and inventory while weighing the desire to increase product lines?
  • 34:44 Why sticking to a game plan can help companies weather economic turbulence.
  • 38:18 Has Saatva seen any revenue slowdown in the face of recent economic conditions?

Ricky Joshi on How a DTC Mattress Brand Reimagined Their Customer Service Centers 

Ricky Joshi Tweetables

  • “I tell everybody who's about to be an entrepreneur: Don't create an entity until you know you have a business.” – Adam Robinson
  • “If they like us online, most likely they're going to like us in physical retail as well.” – Ricky Joshi
  • “I run Saatva like I would be running my own lemonade stand. Being careful, being smart, not being reckless at all.” – Ricky Joshi
  • “In direct to consumer, I've always felt if you don't have the unit economics correct in the beginning, you're just driving faster into the wrong road.” – Ricky Joshi


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