A Tampa-based e-commerce 'bed-in-a-box' startup is armed with a patented mattress. It also has a dream-big mission.
By John Haughey | Contributing Writer
Tampa-based Indigo Sleep will deliver a box directly to your doorstep containing the last mattress you'll ever buy. Money-back guaranteed. No doubt about it.
Pillow talk? Marketing fluff? Hardly.
Restless entrepreneurs Gene DeRose and David Funk have been making dot-com dreams come true for decades. Now they are entering the e-commerce bed-in-a-box business with Indigo — a startup that has a patented mattress and is on a mission.
“We're going to disrupt the traditional mattress market,” DeRose says. “For years, they've been putting forth the model that one bed is good for everyone. This is a whole new approach to designing a mattress that gives the consumer control in a time when sleep is so important.”
The bedding industry has actually been tossing and turning in disruption since 1996, when NASA-invented “memory foam” began supplanting the spring-coil platforms that had replaced the featherbed.
But what really caught the now-legacy mattress market napping was the emergence of online-only retailers that challenged the brick-and-mortar showroom sales model. According to Inc.com, mail-order mattresses sales went from zero in 2012 to $1.5 billion in four years. The online share of '‹the $15 billion annual mattress market in the United States was 6% in 2014, 10% in 2016 and is projected to surpass 15% this year. Leaders in the online mattress market include Casper, Leesa and Saatva.
The sales potential of mattresses that can be compressed pancake-flat, rolled up like sleeping bags and shipped to consumers has not gone unnoticed. According to BedTimes, an industry trade publication, there were 25 “bed-in-a-box” e-commerce retailers in 2014. Now, there are at least 100. Manufacturers, including Broyhill, Serta Simmons, Sleep Number and Tempur Sealy, and showroom retailers such as Mattress Firm, all now sell mail-order mattresses.
So Indigo Sleep isn't the first to go to the mattresses.
But its founders believe they are getting into the field with a mattress that is revolutionary in design and, they stress, in purpose. Both entrepreneurs have track records that indicate they have a good shot at success.
'We decided to play'
A Westchester County, N.Y., native with a English literature degree from the University of Virginia, DeRose left a brief stint as Cosmopolitan's 'Cosmo Tells All' writer in 1990 to join Jupiter Communications as the research firm's second employee. When he left as CEO in 2002, Jupiter had more than a 260-person payroll and been sold to Media Metrix for $342 million.
In 2005, DeRose co-founded House Party, which links brand sponsors with social gatherings. In 2011, he co-founded Skymarker Labs, a digital studio that develops mobile apps “with a social bent.” He is a founder and managing director of 1 World Venture Partners, a New York startup studio and investment entity.
Funk, meanwhile, has a different background. A Charlottesville, Va., native, Funk is a University of Oklahoma petroleum engineering graduate with an MBA from the University of Virginia's Darden School of Business. After more than 25 years in the oil industry, in 2010 he founded Tesouro Biofuels, which produces bio-based fuels. He is a Darden Entrepreneur Award winner.
DeRose became intrigued with online mattress sales about 18 months ago. Through common University of Virginia connections, last fall he was introduced to Funk, who was seeking startup opportunities. “We very quickly saw eye-to-eye,” DeRose says.
Funk recalls DeRose told him how New York-based Casper, launched in 2014, was enjoying phenomenal bed-in-a-box sales. And that was before Inc.com reported Casper doubled its sales in 2016 to $200 million.
Casper “was making a bit of money,” Funk says. “We conducted some research and liked the science and technology. We thought there was enough room in the market for another niche mattress. We decided to play.”
Although e-commerce startups are steadily gaining market share, DeRose says the mattress industry is not responding to the wake-up call by changing its marketing and sales strategies. “Simply, consumers don't trust the industry,” he says, citing pricing mark-ups and sales pitches as consumer turn-offs. “There is a need for transparency and for clean, comfortable products to contribute to an industry that could do better.”
A patent search found the “niche mattress” they could sell “with a focus on comfort, transparency and sustainability,” Funk says.
Indigo Sleep's “Comfort Always” is a two-section modular mattress with temperature-controlled covers that can be rotated or flipped to meet preferences. It can be cleaned from “the inside out” — what the founders call a proprietary breakthrough.
“This can't be found in any other mattress,” Funk says, citing studies that show mattresses typically gain a pound a year in dirt, dead skin, hair and dust. “Generally, mattresses are not made to open and get inside of. You can vacuum the inside of this mattress.”
During head-to-head blind tests several months ago in Manhattan against 15 other mattresses, including models sold by Casper and Tuft & Needle, another leading bed-in-a-box online retailer, the fact that the inside of Indigo's mattress can be cleaned was “a big deal” with consumers, he says.
Another unique aspect of the “Comfort Always” mattress is when cover sections — the top 4 inches of the 10-inch mattress — become worn, they can be replaced at a fraction of the cost of a new mattress. This, say Indigo officials, extends the mattress's life indefinitely.
“Traditional mattresses are designed to wear out in eight to 10 years and you have to get rid of the whole thing. That is why there are 20 million mattresses hauled to landfills every year,” Funk says. “With this bed, you can replace just part of it. It can practically last forever. It'll be the last mattress you ever have to buy. We are providing a choice no one else can provide.”
There are still mattresses made with “dirty chemistry” and fiberglass, he says, pointing out Indigo's mattresses contain “no synthetics, 100% natural latex and third-generation foam technology.”
The mattresses come with a 128-day trial period. If unsatisfied, Indigo offers a money-back guarantee and will retrieve it through third parties. Since used mattresses cannot legally be resold, they'll be donated. “We work with Salvation Army and Goodwill. They will come and pick it up,” Funk says.
There are two “Comfort Always” models, Classic and Luxury. Both models are available in youth/twin, full, queen or king sizes. Prices begin at $599 each — significantly less expensive than traditional mattresses from a store, which can start as high as $1,500.
Indigo Sleep mattresses are manufactured in North Carolina with “ethically sourced” materials from the U.S. “We like that story,” DeRose says. “We are comfortable with that story.”
'A home in Tampa'
Funk says Indigo Sleep received “seed money from friends and family that's still in the bank,” to get going.
The pair could have set up shop anywhere in the country but decided on Tampa. “Why Tampa?” Funk asks. “Tampa has a good vibe to it.”
Tampa offers Indigo Sleep “the ability to build a culture,” DeRose adds, noting the city and region has a “significant population of young professionals and entrepreneurs.”
The company formally incorporated Jan. 1. DeRose splits time between New York and Tampa. Funk moved into an office in Community CoWorkTampa on North Armenia Avenue, a 6,000 square-foot communal work center, May 1.
“I was the only one and now there are 10” employees, he says. “If this takes off — not if, when this takes off — in 18 months we'll have 200.”
Indigosleep.com opened for business Aug. 1. And beyond sales, the founders target an employee base that values a company's mission, not just profits. To facilitate that kind of model, the company calls employees Indigoeans.
On that front, for every mattress it sells, Indigo Sleep will donate $50 in the buyer's name to a nonprofit among a list selected by Indigoeans. The list includes the American Civil Liberties Union, the Southern Poverty Law Center and Planned Parenthood.
“We will find a nonprofit to support locally, not just with money but with time,” Funk says. “We want people with that type of intensity and commitment.”
Indigo Sleep is selling mattress through an e-commerce-only business, but that's not why it's in business.
To get to the why, the company relies on business author Simon Sinek and his book “Start with Why: How Great Leaders Inspire Everyone to Take Action.” Indigo Sleep co-founder David Funk watches Sinek's popular 18-minute TED Talk video, “Start With Why,” with every new hire.
The video “helps define why we are in business,” Funk says. “'Be good now. Be good together.' We recruit to that mantra. We're calling ourselves Indigoeans. That is who we are — we imagine, we engage and we act. We want to act like that in Tampa.”
The list of things people said they would never buy online is long, from shoes to couches to diamond rings. Then came Zappos, Overstock.com and Blue Nile.
With the proliferation of “bed-in-a-box” e-commerce retailers the past two years, the cushy spot people sleep on top of is now an online thing people buy. Like in most cases, conventional industry wisdom failed to spot changing purchasing patterns. Or millennials.
The Big Box retail sales model assumed consumers would not spend $600 to $1,000 — or more — on a mattress they could not see, touch, or lay on in person. But according to the Better Sleep Council, millennials aged 18-to-35 replace their mattresses more often, are more likely to browse online before making a purchase, and to buy a bed-in-a-box without visiting a brick-and-mortar showroom.