S2E9: How to Build a Billion Dollar Company Without Major VC-Funding - with Entrepreneur of the Year 2021 Manuel Müller

Business model that they have superior. These guys come over to Europe, they kill us, they eat us for breakfast. So what should we do? And I told him Dennis, I think we should also get into the Casper business model. I'm going to talk to our suppliers, come up with a mattress that suits everyone and try to do that as a side dish. Dennis and especially our investors, they were very concerned. They said, "No, don't distract now. Try to go with this domando thing and do your TV advertisements, focus, focus, focus." I could convince them that I could do it after the hours together with an intern that I just hired. It's only two best three months, and the MR was already speaking of domando. Welcome to the Digital Transformer Podcast. Your number one podcast on digital innovation, transformation and venture building. We help entrepreneurs and corporate innovation leaders like you gain the knowledge and skills you need to build a leading digital businesses of your industry. Today, I'll talk to Manuel Mena, founder and CEO of Emma the Sleep Company. Entrepreneur of the year 2021, WHU Kellogg, A.Trust and Arbiter alumni and Angel Amester. Manual went from Frowning his first business at the age of 19 during his training ship to building Emma the Sleep Company into the leading digital sleep company in the world. That is on the path of reaching one billion in sales. Despite only having raised 7 million in total funding and despite facing competition from half a billion funding being moths such as Casper. We talk about his three core learnings when it comes to building market leading DTC companies. Notably about how a lack of investor funding helped him to build a leading company in the space. Tips on how to stay close to the customers while scaling and the smartest way to identify opportunities worth pursuing. Plus, we cover many more insights on funding teams and inspiring cultures and much more. So with no further ado, let me welcome Manuel. I first heard about Emma years ago when it was still a very small startup. And by now you've become a leading DTC player, you've nominated Entrepreneur of the year 2021. And it's just like what particularly enticed me is also to see that you already started your very first company at the age of 19. So you can say that you're a true entrepreneur, so I just speak that scene at all. And so I'm really looking forward to the session with you today and to explore what you learned along the process. And yeah, maybe let's start right in now, maybe give the audience a bit of a background on how this all evolve, how your journey started from the early age on. And maybe then we can dive a bit deeper into what the major challenges you encountered during this early stages, but then also later on, let's say during the scaling phase and so on. So forth, but let's maybe first started the beginning of your journey. Yeah, just tell our audience a bit about how this all came about. Cool, okay. Yeah, hey, Kylian, thanks for having me. First of all, yeah, as you said, I started very early on in the age of 19, maybe just to just to let you know about the background. So I come from a very small village in northern Germany, like originally I was born in Dortmund, then I moved with my parents to Austria, how it's called in Germany. So very much north to the Dutch border, very small boring town grew up there in a very nice environment cannot complain. And I feel I have always been a very entrepreneurial person without knowing like I think I already had very entrepreneurial skills very early on. I was working a lot besides going to school. I come from a family that has no academic background. So I'm first gen as we as we like to say today. It was quite obvious for my family that I shouldn't do the A levels the Abitur in German because yeah, my family was just not used to that. But it was yeah, it was very hard times back then like 20 years ago, there weren't enough trainee positions. So these Ausbildung, Stalin in Germany. And so as I didn't got into one of these training positions, I had to do the A levels because otherwise I would have been unemployed. So I went into that my my parents were like very unsatisfied with that situation because they thought I better go working. And when I while I was doing that, I was still working on the side was doing night shifts in the gas station during the day I was working in a garden nursery and and all that stuff. My actually my grades weren't that good. I was always I always try to jump only as high as needed in order to get to the next levels. I wasn't very interested in school stuff at all. Yeah, then after that I did my training ship, which was a leadership in a at a at a car seller at a Volkswagen car seller. Yeah, and then like during that time I was looking into different ventures that I could start like looking into different directions. And I remember that there was a guy that I met on a on a family convention and he was into mattresses. He was into medical mattresses. And he told me hey man who like as long as I know you you always wanted to to become an entrepreneur like back then I didn't know that word. And like before like going to university or doing anything else, why don't you look into that direction because the German medical system is currently turning around there's not enough money within that system to have for example medical mattresses for nursing homes and hospitals etc. And so I just jumped into that came up with a business plan without knowing how to write a business. And just started my little first company with some funding from KFW, which is a German governmental bank. So things got rolling the mattress story got rolling so to say that's interesting. Maybe to briefly jump in here before before dive into the mattress story. What was the point where you realized hey I actually want to become an entrepreneur and you said you had it during your training ship at the Cardi leadership. But what was it like what was this feeling that ultimately or this like the sudden. I mean I don't know maybe you can call it epiphany or this like sudden inside that you said hey like this is something that I want to pursue rather than going the classical path. Yeah, yeah, what I figured out quite early on I had the gut feel I'm a very intuitive person and I had the gut feel that if you want to achieve something it's it doesn't only have to be like you cannot only achieve something by going the straight path. But there are always paths on the left and on the right that you can pursue and one path can be I don't know going to university have great grades and then like try to try to go your way and step up. But I was under the impression like looking around myself that there are also a lot of great individuals who who made their ways. I mean back then in that small village maybe not that like inspiring personalities as many people guys know what I was under the impression that you can also make your way if you don't go the straight path. So maybe maybe as one example the German army wanted to to track me for military service back then still we had to do military service and I very much knew that this doesn't have any like impact for my life. I didn't want it to go there was a waste of time and so I was talking to my medical doctor to come up with reasons why why I couldn't go there and like first when I when I went to this like army check up with the doctor they said okay you should come over to us you're fine you're in shape. So then I went to my medical doctor and we came up with some stories I hope I can I can say that from from the perspective but I mean it's 20 years ago and most stories it turns out those stories were as convincing that they gave me the T5 grade and T5 means we don't want to see you please stay at home. So that's yeah maybe part of how I how I tick and how I try to yeah or maybe maybe one entrepreneurial edge that I identified back then that yeah sometimes you also have to overcome the system if you think the system doesn't make sense let's phrase it this way. That's an absolutely very very important point I mean if you it's an off the side example right but like you look at Elon Musk he's like going to space where there's basically no rules he goes to like into the the the car man or the the autonomous driving where there's no rules and so on so forth and like that's often something where you can somewhat like go around the system that's true. Very good translation yeah. Yeah. Cool. Let's maybe jump into your the mattress story so to speak. Yeah. Can you briefly explain what was like what was maybe one situation where you said in the very early beginning hey this was a critical point for us like I was starting out and suddenly I realized hey this is like a huge hurdle had to overcome. And maybe briefly describe what that situation was like and then we can like that I'd be super interested to know how you also let's say found your way through. Yeah so so you're talking about the DTC business that that we are working on nowadays I think the very critical situations already happened very early on when Dennis and I so my co founder figured out that we that we are very bad and raising money. I think we were way too I would call it honest like we weren't overselling and that is something that we do until today so we rather like to over deliver and under promise in the end. But especially in the very beginning when we came up with our first business plans I think they weren't just ambitious and so yeah we got a lot of notes essentially we only got notes. So we had to take our own money, we had to take some money from, especially Dennis Perens, family, some former colleagues in order to get the business rolling. So I'd say that this was one of the biggest problems that we were facing in the very beginning, just getting funding. That's interesting, because you often hear, let's say, that the typical first founding round comes from Perens relatives and so friends. It's just curious to me that, again, in this situation also, let's say, A holds true, but also that I'd be interested in understanding how to, then ultimately, let's say, convince your parents and your friends and so on and so forth, or in this case, your co-founders parents to give you that money, because I think it's also, let's say, probably a maybe mental challenge, or like a thing you might not feel comfortable with, right? Like knowing that, hey, I've no idea whether this is going to work out or not, and I might be burning however many cases, we're not going to be one case, probably rather like in 10 or 20 or even 50K. So how'd you deal with that? You know, I think the case wasn't as bad so that we couldn't get money from relatives or friends because we were essentially working break even from the very beginning. So I guess they had the confidence at least to get the money back, but the performance and the outlook wasn't as great to get money from receives, from professional investors. And maybe that was the trade-off that we had to do then in the very beginning, right? So as we didn't have money or we only invested our own money, we had to get the things right. So we had to be profitable from the. From the get-go. Yeah. Yeah. So like first order profitable and then hopefully turning the entire case profitable in year two or three so that we could also cover overhead. But yeah, to be first order profitable, that was our goal from the very, very beginning. So you had to really focus on unit economics and all that jazz, right? Right. Yeah. That's interesting because a lot of companies obviously like they rely on, especially if you look at, let's say, the traditional VC businesses, they burn money for forever without ever really making any money in the first place. And so in a way your business model was really something that was focused on cash flow and on positive cash flow from the very beginning. Yeah, that's right. And I mean, in the very beginning we perceived this as a threat. Also, we were thinking, okay, so maybe this is not a great business. Maybe we are not the best entrepreneurs. Like some things off. We don't get the money. Even though I mean, back then we already had like a decent education of backgrounds. Then it came from EBS and it is PhD at Goote. He was with McKinsey. So we weren't like bloody young entrepreneurs. But yeah, we just didn't get it. And the great thing is that as we didn't have the money, we had to get things right as I just said. And by doing things right, when you then add money, you can scale excellence at the end. Where is if you, yeah, if you don't got things right, you put money on it. As I like to say, yeah, you in the end, you scale shit. So that's, that's, and that's, and that's, and that's a learning that we got like in the very beginning, which in the, in the first instance was a bit of impressive, honestly. But then we found out that this is our core strength. Right. It's the core strength of the company, which we can scale until today. That's very interesting. And how did you deal with this, let's say, mental, mental pressure that I imagine you've been under if he's, because what you just said is that, hey, like we thought we were, let's say, not good entrepreneurs. We're not good enough to raise capital. There's probably pressure on your shoulders. How would you like handle that? Yeah. I mean, the good thing is that we weren't in as solo entrepreneurs, but we were a team or like our new dentist some years before. It was a friend of mine. And we had a very good trust relationship. Also what's important to know is we are very, very complimentary. Like if you, if you try to find two, two people who are not the same, then we look into, into our case, which means that there can be stress from different situations. There can be stress because you can, you don't crack a problem because there's no money anymore. You need to be creative. You need to problem solve, whatever. And it turns out that for different stress factors, it was either Dennis or I jumping into the topic based on what kind of skillset is needed. And what I also then recognized when taking an outside perspective on our relationship as co-founders, that each of us was very supportive whenever one person was like felt too much pressure. So we were also like coping with the overall pressure and stress because we were very supportive on that and also very empathetic with an our like co-founder relationship. So I'd say if I would have done it on my own or Dennis would have done it on his own, we wouldn't have been here today. Yeah. Interesting. Do you think that, because I heard like I have my own experience with this, but also like hearing from what other people say. Some people are strong opponents to founding ventures or founding businesses together with friends because I say hey, it's like it's a very thin line to sometimes walk, right? Like when are you talking in the role of a co-founder and when in the role of a friend, what other say and what I hear from you as well as that you say hey, it's actually so crucial to know that person well, to understand that you also have a trust related trust relationship that you can ultimately, especially when let's say stress comes that you can cope with it. Yeah. Yeah. I would I know where that thing just comes from and I would agree that investing into companies where you have two or three friends founding something or maybe even a couple that this is not a good thing. And I know where it comes from and I would support that that hypothesis on the other side. And that can come from friendship or having a relationship or something. You need to have a very good trust relationship, but you can also build a trust full relationship with someone that you are getting to know and then working on a business plan for let's say three, six months. It's not as deep, but I would say it's definitely enough to to start something. And then in the end, it will be very much about empathy and understanding the strength and weaknesses of the other person, which is something where Dennis and I were struggling for the first, let's say two to three years until we really found out and reflected who is the other person. What is exactly the strength and the weakness and how to cope with that? Because as I just said, we are very complimentary, which means we are very different in the way how we tackle problems. Dennis is very analytical. I'm very creative. And that's just one example. But when then dealing with each other on a daily basis, sometimes you get frustrated because you think, why is that person doing things like very different than I'm doing it? And it took us two to three years to identify the beauty behind the complimentary relationship that we had. Was there a systematic process that you went through? Did you purposefully explore each other or reflect on how this relationship is and what the strength and weaknesses are of the other person? Was it just in the process of developing the company? It just so happened. I think it came in the process. I remember that in the first one or two years, I was sometimes a bit annoyed, but also in the end, I was lacking self-confidence because of that. Dennis is one of the smartest individuals that I know. He has a very fast CPU. He cracks a problem when only writing down half of the hypothesis. And that can be very annoying if you are rather like a divergent thinker and try to take a problem from different perspectives, maybe different solutions in the end. So it was, I think it came with the tension of working closely together and then like really like, yeah, like the tension and the heat that results from that complimentary relationship so that in the end, you have certain eye opening moments where you can really see and identify what's the strength of the other person. Very cool. Very cool. So to briefly sum up the first face, so to speak. So you said like crucial parts were a that you were like a very complimentary founding team that could ultimately handle the stress of the situation not really being able to let's say a race funding, but then all the other like say challenges that also probably that you encountered. And that ultimately you can somewhat, if you haven't already this relationship with someone a good way to do this is ultimately, but like for instance working together on the business plan, figuring out how the other person thinks, but that also like for you did the crucial really crucial success factor ultimately was that you that you didn't get funding because it forced you to really take this perspective of the unique economics and being profitable from the get go. And so ultimately for to be excellent in what you do. So have like a very very clear focus and then down the line, once you let's say perfected the system by getting giving money into the system and fueling it, you could like instead of scaling shit you scale the excellence. Yeah, that's that's a perfect summary. Thanks for that. Yeah, it's true and what turns out and I mean I'm going to WRQ next week for ideal app and I would have a speech on on exactly that topic like scaling excellence and maybe also with with a bit of lower funding. I think many entrepreneurs give the way too many shares in the very beginning. They very much trust investors and they try to solve problems with money that can also be solved like by the founding team themselves by just thinking about it in maybe a smarter way, but not only throwing money at the wall and trying to make it stick and then identify which way to go. So it's a bit more let's say be comfortable with being uncomfortable like financially and financial distress and rather let's say use it as an opportunity to really. Yeah, I'd say I'd say so, but also I think there's still the big hypotheses out there that the more money you're getting, the more people you employ and the more your. Yeah, it's not only the cooler but that it will also help you help you succeed and essentially with our industry we see that this is not true. We have two or three global competitors that started at the same time, one of them is Casper raising half a billion in equity. They are nowadays maybe one third of our size highly unprofitable, once we raised overall 7 million over the course of the last eight years, which is great for the founders because you still have a lot of the equity but it's also great for the company because as a company you have a different mindset. And I think especially that mindset is also what drives many of the amys how we like to call them like working with us because we need to be a bit smarter in doing things in the end. We cannot solve every problem with money. And how does this trick? I think it's a fascinating point and how does this trickle down let's say from because you have the mindset right but how do you let's say pass it on to all the other employees does it I imagine at least it starts already in the hiring process and then like goes through continuous feedback talks and like just forming a culture but because you maybe briefly elaborate on what you think or like the core factors in order to really take that mindset that the founders have and let's say bring it to the entire employee base. Yeah great question because that's how Dennis loves to call it our core differentiator and maybe to put that into perspective as I said we have those competitors out there they are all smaller by now so there's no sleep D2C company in the world that is bigger as of now than Emma they all had way more funding and if you look into the different variables that we need to be deal with as companies like we mainly use the same suppliers we get the form from the same plans the covers we have the same carriers like dpdgls you name them but also we use the same marketing channels google facebook television etc etc so I'd like to say like many many variables they're just the same but the outcome is super different and it took Dennis and myself some time to figure out what is the core variable that makes us more successful than all the other competitors and it turns out it's the people and when I say people especially besides the human individual themselves it's how we orchestrate them it's the culture and it's the structure it's the organization of the company right and I don't want to go as deep because like it's it's a super fancy system that Dennis brought up like Dennis is our cultural minister I'd say but it starts with the hiring as you said it's the weekly all hands meeting where we present like different areas and teams it's the way how how we do meetings how we interact with each other the decentralized decision-making processes a lot of ownership for everyone but at the same time also a very very high level of transparency meaning that essentially on a daily basis like even even an intern could know I don't know what's the profit margin in Japan or Australia at this moment and time and having that transparency also forces people and teams yeah to to focus on profitability to focus on having a low cost basis etc etc so you basically have like let's say open-dash boards for everyone to look into and I imagine probably also some form of OKRs also objective and key results that are openly visible for for everyone in the company that's that's that's that's that's right and we don't work with OKRs anymore based on the on the side of the company we figured out that this is not the right format anymore but we have those weekly meetings where we have leaders from the different teams then jumping into one specific team topic even though they might not be related in that team topic so that we can really make sure that on the one hand we have high levels of transparency but also that we have the greatest minds on the biggest problems on the company I understand OK so let's say you face particular challenge and even though it's not related to let's say marketing directly because it's technically a tech issue for instance still bring the marketing lead into the meeting in order to right yeah or like like essentially also I jump into that which is also something where we might be a bit different like even though I'm very low tech I don't get anything on tech the great thing if you if you put like a tech dummy like me into that meeting is that I can have an overall perspective I'm not that deep into the topics I can try to connect those superficial dots that I see but also question things that might be stupid in the very beginning from a tech perspective but in the end they can make a difference and that's also something that we want to see because you force people to let's say get very clear and like explain it in very simple terms so to speak as well right yeah and then and then you might have like a superficial dummy conversation where then maybe even the tech people figure out oh I didn't think about it this way yeah yeah right because and I mean this this comes from the nature of a human being when you're an expert working in a certain area you focus on expertise and you focus on really like really diving very deep and that being said it makes sense that you can also like take a step back and then see the big picture which is not always as easy in especially in like in we are now 930 people so we are not that small anymore so we yeah we we have a lot of experts doing what yeah and I think that's also let's say the the biggest challenge and the biggest joy at the same time of a founder to be able to like really dive deep into particular topics and still have like the overarching overview over everything right yeah right right and maybe maybe I'm maybe I'm more often in this high level altitude when it comes to identifying topics varies then it's is like then is can get very close and very narrow because he's a very analytical structured person I'm more of the creative strategic person and yeah combining that yeah can can really then lead also to better results yeah very interesting let's maybe shift gears a bit what was the situation like during I mean we already covered right now let's say a bit of the the scalar version of the company but in the process of getting from the situation that we talked about initially we had struggles getting funding where it was really about let's say getting it off the ground and then let's say the the current situation you being a market leader the biggest player in the DTC business on this journey what was a big challenge that you encounter or maybe the biggest challenge that you had to overcome and how did you deal with that there are two big challenges I'd say one challenge was so when we started the company it was a multi brand online shop for sleep products essentially mattress so we had the biggest portfolio we were like let's say the zalando of mattresses in Germany like 180 different mattresses and then like pillows to base you name it right so we did that for two or two and a half years running on I think three million break even not super fast growing but yeah at least we could we could pay the rent and what happened then is like we were already in a phase of starting the first domandal commercial we were like setting everything up so we wanted to scale we did a little funding round so that we could also afford it and what happened then is that we got the news from the US that Caspar started the business and that they raised like I don't think it was already half a billion back then but hundreds of millions and they also announced that they want to come to Europe and I remember that I had to talk with Dennis after the hours and I told him Dennis if these guys come over to Europe they only kill us they eat us for breakfast like that that's very important yeah like we are so small and the business model that they have it's yeah it's superior they only have one mattress and they build the mattress in a way that it really suits everyone from an economic economic perspective if that's true or not I don't know yet let's see but it's crisp right the story very crisp so they just gonna kill us and then it said yeah but I mean now we are in this domandal business we just got I think it was 500,000 euros back then from San Mevestis also from high tech goodness for so what should we do and I told him Dennis I think we should also get into the Caspar business model let's give the child a different name maybe a female name, so we can be a bit different from them. And I already did some research within the top five of every European country for the female first names to be given to a baby. There's always Emma in the top five. So let's call the child Emma and do something like that. I'm going to talk to our suppliers, come up with a mattress that suits everyone and try to do that as a side business. And Dennis and especially our investors, they were very concerned in the very beginning. So they said, no, don't distract now. Try to go with this domando thing and do your TV advertisement, focus, focus, focus, don't distract. And I could convince them that I could do it after the hours together with an intern that I just hired. So to say as a side business. And I did that then for like some weeks. We came up with a website. We also put two new founders on that topic, pushed them a bit into the right direction. And it only took us three months until Emma was already bigger than domando. And that was the starting point. And what was the main driver behind that? I think it was the crisp story, the scrawly telling on the website where you can really make customers believe you don't pay like for the entire supply chain. But it's a D2C product that is being optimized to 95% of the people. So we had a great conversion rate. We had a very low return rate on that product. And a great margin so that essentially we cut already from the very beginning on television scale it profitably. That's very impressive. And I love the little side note of how ultimately came up with a name Emma. I think that's genius. And I think at the same time it's so let's say, I think it's a problem that a lot of companies face. But we started up as well as corporate companies that they just try to get into too many boats and completely distract themselves. And could you maybe give a bit more of an insight on how you convince also these stakeholders. So to speak to the investors, your co-founder and so on. So fourth of that is actually right now a venture with pursuing so to speak because ultimately that in the beginning, right speaking from that situation, it just meant even more operation complexity, even more, let's say thanks to focus on. And it's interesting because oftentimes you say, hey, you either pivot the entire business, but here you really set a kill. Let's do like a two-lane approach where we're going to continue with one thing. And let's say try a little thing in the meantime, we're at the side. Yeah, I think it was way too early to think about pivoting it back then. That's what we did one and a half years later when the Mundo was stuck. And Emma was already I think 40 million the Mundo only one and a half. So we try to, okay, let's get rid of the Mundo now. But back then it was still in hypothesis. From my personal perspective, it was a very, very strong hypothesis. But as I said, Dennis was a bit in between. I wouldn't say it was against him, but he was in between. But especially our investors, they thought it's a lot of management distraction. Don't do it right now. And so in the end, it was a compromise, right? I said, okay, during the day, I'm focusing on the Mundo, but after the hours together with my intern, I'm going to focus on Emma, right? And it took some weeks then also to see that there was potential and traction behind it so that we can also shift gears and focus more on that. And then you used the, let's say, initial traction to then convince them, hey, this is actually something worth looking more into. Right. Right. And the great thing, Kirjan, was that we already had this Domando business. We had the entire company structure and people. We were already on all those marketing channels. We knew which campaigns work for mattresses, which don't work. We already had some little TV experience for Domando. So the great thing was that we could put all those capacities and learnings on Emma and then skate it very quickly. I think it only took us three months until we had a million of revenue per month on a profitable basis, so very, very quick. And as it turned out, when then Caspa really came to Europe, I think it was six months later, we saw people on social media complaining why Caspa is now copying Emma. So that was a very interesting situation because it's a bit, first come first surf from a consumer perception. Right. That's super interesting. So essentially, I mean, you you somewhat gained the inspiration from what's happening overseas, which I think is always or it can often be a good approach to let's say, anticipate also what kind of trends or influences might impact the whole market. And then let's say, did it as a side business leveraging your own capabilities, or at the once of the existing business, so to speak to them, and build it up. Yeah. Yeah. Very good observation. And I think it's something that we also love to do on to today. I think we are not like as a corporation. I don't think that we are the most creative corporation really coming up with very, very new stuff. But I think we are very good in observing the market and understanding the consumer. Right. And then in the end, executing very fast and building on that, especially in the US people, or like I think many, many people think that especially companies in the US that many of them are very innovative coming up with, yeah, being the first in some field. But if you look behind the scenes, also for the very, very big corporations, until today, they buy patterns, they buy teams, sometimes even seeny finish products and then build it, like finish it in house or scale it in house. And I'd say it's, yeah, it's also partially that approach which we are talking about. It's interesting because I mean, in a way that has the advantage that it gives you a pre-verified product, so to speak, in a way. Because if some of the works in another market, the thing you have to do is maybe to tweak it a bit, but like there is some sort of customer demand, like it's not that people in US are 100% different than people in Europe is just say they might have slightly different needs, but ultimately then it's the question how you adjust it, right. And the same forward you just said, like probably companies buying those pre-existing solutions, because it gets like the first ideation plus validation process maybe out the way, but maybe diving a bit into this, how did you then really in this situation validate whether it was an actual model, like did you have particular KPIs, did you say this is something or did you go talk to customers, which I could imagine is difficult, we're having a mattress that's probably not even there yet, trying to validate is that something that's ultimately peeling and comparison to the ones that you can get in like whichever other store is out there. Like how would you go about this? Yeah, yeah, very good point. Back then our market research wasn't as fancy and also consumer research wasn't as fancy. So what we did is that with the website that we were building, but also then the TV commercial, we were going to the train station in Frankfurt, Hong Kong, and asking people waiting for the train looking into what we just created and trying to find out what stick to them, so what was their perception, so it was very qualitative interviews that we did in order to see whether we are on the right track and then also like testing a bit of like willingness to buy, yeah, willingness to go on a second device when sitting in front of the television, so what's the call to action, appropriate, what's the value proposition appropriate. We did a lot of that in order to really improve the conversion rate on the website and for the TV commercial in the end. So the way you sort them, or pre-sold them so to speak on the product, like you just like you tested how you can, like how do you have to position it in order to the product to appear to be like the best thing out there. Right, and it was very eye-opening, like talking about the first MRTV commercial, it was a it was a trick commercial like a comic. I think we invested 10k into that TV commercial and we ran it for I think one year, so we like generated like several millions of revenue with that TV commercial because it was very profitable, it was it was in your face and we tested it with consumers at Frankfurt Hoppon 0 for some weeks and iterated, iterated again and again by doing scribbles. And what it turned out is that we needed back then, we needed to have a very strong focus on telling consumers that it's risk-free, it's a hundred-night trial, like trial sleeping, so to say, and that you can send it back and get your money back if you don't like it, which essentially doesn't have anything to do with a mattress. But what we saw when doing those, like when doing that research is that consumers weren't interested in the mattress at all when it comes to buying the mattress online, but they wanted to have the safety that it suits everyone on the one-hand side and if they don't like it, that they get the money back. So we had a very big focus on that, which is not true anymore nowadays because nowadays every consumer knows you can have this one-hundred-night trial and that it works because everyone knows everyone who already tried this, so nowadays we might focus more on product and brand in the end, but back then it was a very, very important thing. I think it's also pretty, let's say, from that perspective back then, like a risky thing to do, so to speak, because in the worst case, if you're good at marketing, but the mattress is, let's say, subpar or shit or address shit, then like You've got to have a whole lot of returns coming in. But I think that's a perfect illustration. And sometimes you just have to, what's they take a leap of faith as well. And just believe that's true. This is going to work. And we have a good product. But also when it comes to the mattress, the great thing is that you can get those cohorts on the phone that you send the mattress to. And like, I mean, at least those who send the mattress back and then ask them, what was the problem? Was it too soft? Was it too firm? Didn't you like the bounce? Some reported that it had a bit of a smell because it was very freshly produced, right? So then you can tweak this over time and really come up with the mattress where in the end you have that 95% interval of people who like the product. So it's really still even back in this gaming phase stage super close to the consumers going out there with screw balls getting the people on the phone. Very interesting, very cool. And you said there was a second challenge that you had. Oh, yeah. Yeah, the second challenge that was one of the worst days in my life, I'd say. I think we had a very great product. We had great consumer response. But then we were being bought by Schiffton-Bagen Test, which is a huge German consumer association. And I think they tested eight or 10 mattresses. And we were in, I think, six or seven. We didn't have a good mattress according to their standards. It was a very durable mattress. Also, it had some other nice aspects. But we didn't focus on some aspects, which are very important for Schiffton-Bagen Test. And if you don't have them or if you don't get them right, then you got punished on the great. That was a very bad day. Yeah, because we thought we had a great product. We had great response. But yeah, if you have a bad grade with Schiffton-Bagen Test, then this really goes down into your sales numbers. So what we did is we went back, we tried to better understand the system. And it can be things like, I don't know, your manual needs to have the right font size. So that people can properly read it. Or the mattress needs to have handles. Otherwise, you cannot turn it. Even though you can argue, do you want to turn your mattress every day? But there are some of these aspects. And we really needed to get into that system and figure out what's really behind it. Yeah, and remember, it was some critical weeks and months. Because on the one hand side, we had pressure from others who had a better grade than that we had back then. And at the same time, it was very hard to get into that Schiffton-Bagen Test black box. But as it turned out, like we put a lot of efforts into it, we already had some best-choring products in the meantime with Schiffton-Bagen Test. But also with other international consumer organizations, which in the end is a conversion booster for you also. So we tried to turn that threat into an opportunity by really getting behind that system and cracking the system. Because recently also came across that another company said, hey, we have those, let's say, review platforms, such as Clutch for web development and so on and so forth. And in a way, they score you and depending on how well you score, you get more traffic or you don't get traffic. But really leveraging, let's say, their scoring mechanisms and saying, hey, they pay attention to ABC. I mean, it's for a reason that they do this, right? Because they have the experience in the market. And so similar, in this case, I imagine that like Schiffton-Bagen has a particular rating criteria that customers pay attention to. And then they say, hey, this is maybe something that's important. And if you can understand those, you can adapt it and it ultimately, even though it might penalize you in the first place, later down the line once you tweak them, it actually gives you, let's say, even better cutting edge because you can, let's say, make it an even more perfect product and you can perfect yourself's channel, that's also for it. Yeah, that's right. And in the end, like consumers really trust those organizations for a good reason because many of the criteria that they apply is variable, not all of them, but many. And yeah, so we try to get behind that. And it turns out that we're pretty good in that in the meantime. That's super exciting. Now, taking a step back, like we covered a journey from the very early beginnings to how you scale it, which the challenges you overcame in the meantime, looking back, what would be the one tip or one suggestion that you would give founders as well as people and corporates who try to launch new and innovative products to really, let's say, focus on or it's good to develop or anything like that. What would be your number one suggestion for these people? I'd say try to make your business plan work on the back of the envelope. If it doesn't work on the back of the envelope, then you might not have a business. I mean, still you can pivot a lot, but if it doesn't work on the back of the envelope, and I'm saying that because I see a lot of companies where I'm asking myself, and I don't need an envelope for that, what's their business model, actually? And I think that's a crucial point. And it's even more crucial these days when there's not a lot of funding, but sometimes I feel especially in those times when there is a lot of funding out there, people just don't care. They think, okay, let's try this and that. And I can still pivot. There's a lot of money out there. And I'm a smart, individual, I'm gonna get there. - Awesome, cool. And looking for what would you say, or let's say, especially in the D2C sleeping business, but also let's say beyond like maybe in the health business, what is, like how do you see the future evolving? What are, let's say also with the young generation right now, in Gen Z coming up, having different expectations. As well as let's say, yeah, everything happening in the world right now. What do you mean? - You mean from a consumer perspective, I guess, right? - Yeah. - And what kind of implications does it have for a business? - Yeah. So what we see is that the industry is still very, very fragmented. So it's a global market of 40 billion. If you take it very narrow, so only the sleep market. And the global market leader is at two and a half billion under one brand, which is temporal pede. So we might be at a billion next year hopefully, but that also tells a story, right? It's a super, super fragmented market. They are barely companies who really have global reach. Am I saying more than 30 countries by now, we have the aspiration to have that global reach. And what we see is that the topic of sleep has it, like that the awareness of the topic of sleep is raising. It's raising in the more developed countries, more developed consumer countries, but even more, it's raising in the emerging countries where still people wanna step up and try to invest into health and wellbeing. So for example, in China, in India or Brazil, there's even a faster shift within the environment towards better products than what we see for example in Europe. - Yeah, I can definitely echo that. I think like, especially talking about Genset, like the people born between 1995 and 2010, these people are super, that's a future consumers or those people that just entered the workforce are already big consumers. I think they're super health aware and that's something that will trickle down and will impact not only the sleep industry obviously, as they track their sleep, they also might one understand how does it look like with respect to my posture and so on and so forth, that I can really make sure that I take good care of my body. - Yeah, I agree. - Cool, awesome manual. It was a pleasure and a blast having you and I think the stock was very inspiring, lots of very interesting and cool ideas. I really enjoyed it and yeah, would love to welcome you again in the future. - Thanks a lot, Keir Jan. I had a very good time and it was a lot of fun also for me to reflect a bit on the last years.