Sramana Mitra: You’re saying that from your Google PPC, you would target only the region that is close to your manufacturing and distribution centers?
Ricky Joshi: Yes.
Sramana Mitra: How much of this did you launch with in 2011?
Ricky Joshi: Are you asking which market?
Sramana Mitra: Yes.
Ron Rudzin: We started in the northeast. We were able to deliver from New Hampshire down to Virginia.
Sramana Mitra: How far did that take you? From a revenue scaling point of view, how far did you go with just northeast before you layered in another region?
Ron Rudzin: I would have to look that up. I’m going to say it was probably about a year to a year and a half before we went to Chicago and California.
Sramana Mitra: Did that northeast strategy get you to a million dollars in annual revenue?
Ricky Joshi: It did.
Sramana Mitra: Just by one region, you managed to get all the pieces aligned.
Ricky Joshi: Yes.
Sramana Mitra: You started at northeast and then layered in different regions. The advertising agencies aligned with those regions. What else in the story of building your business over the last four to five years was an interesting inflection point or strategic maneuver that yielded results?
Ron Rudzin: One of the things that’s interesting about the mattress space is that when we were first doing this, the space was affordable. We got to the business for a few hundred thousand. It’s becoming a very popular space online. I think our timing was great. We were able to take a region and really fine tune our business and learn several things. We’re still learning, but we learned a lot of things.
We brought several costs down as we took our business throughout the country to now having 18 factories building for us and 135 fulfillment centers delivering for us. When I look back, it was really about catching the mattress space online when it was affordable. To go out and do that today is significantly higher than it was.
Ricky Joshi: To top off at that point, it’s a very competitive space at this point. We always feel that we did the hard work at the right time. We were the only ones in the space to grow the way we did without having to put tremendous cost into every region from an advertising perspective. We were able to organically grow. That really paid off.
One huge inflection point over the last few years has been, as Ron alluded to, is that the space has become a lot more competitive. In 2014, Casper raised a bunch of venture capital money. All of a sudden, other brands followed with a different model. It allows a bed to be compressed and ship to your home. Because we have 18 factories and 120 distribution centers, it allows us to provide in-home installations, mattress removal, as well as a very different type of product. We are very different from those 2014 players.
All of a sudden, they brought a bunch of light to the mattress industry. That was a huge inflection point. We had all the right positioning and we had done a lot of hard work on the marketing side to really tap into that opportunity. In spite of competitors, our market has grown over the past three years.