← Unemployable with Jeff Dudan
Unemployable with Jeff Dudan
The Crazy Idea That Built A Billion-Dollar Brand: The Founder Of LoveSac & His Story #152
01:03:04
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- [00:00]
A
Hey, everybody, this is Jeff Duden, and we are on the home front. Ideas are cheap, especially crazy ones. It is those who take action that change the world. Sitting in his living room one week after high school graduation, a young man says, how cool would it be to make a beanbag the size of my living room? Most people would laugh and move on and maybe take another hit of whatever they were doing at the time. But if you went out and immediately bought materials and made that beanbag and then built that business around it, that would one day be worth a billion dollars. Your name can only be Sean Nelson. Welcome.
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B
Thanks for having me. Appreciate that.
- [00:43]
A
Yeah, man. Great story. So excited that you're on with us here today. Big fan of the product. LoveSac. Big, big fan of your story and a big fan of your coffee table book, which, when I got it, I didn't. I said, why did Michaela give me an encyclopedia? And then I realized that it was. That it was. That was your book. But really excited to have you on here with us today.
- [01:08]
B
Thank you. Yeah, I tried to do something a little different with this book, and, yeah. Proud of the way it turned out. It's. You could actually read it in probably, like, 90 minutes. It's pretty short, but it's got some hefty.
- [01:20]
A
Yeah. Pictures are great. They really tell the story. Can you share with us the Reader's Digest version of kind of the Early Days with the. With the. What did you do after you made this massive beanbag?
- [01:36]
B
Sure. Yeah. I mean, I had to write this book because the Story of Love sack is just so kind of crazy and also relatable because I think it's the kind of thing that obviously anyone could have done. You know, I. I didn't need to be a programmer or son of a billionaire, you know, whatever. Yeah. To just get off the couch and buy some fabric and bring it home and cut it out and start sewing it and jam my mom's sewing machine. And then we took this thing around. It took me three weeks to stuff it right. All the soft stuff we could find around the house. But it was the foam that I cut. You know, like camping mattresses, like, with a bungee cord around them. I cut them up on a paper cutter. And as we got this thing full, it would fill the back of a truck, and we'd take it around camping. We'd take it to drive in movies. We'd take it to events, and everyone was always like, oh, my gosh. What is that thing? Where'd you get it? And it was at that Moment, of course, that we realized, you know, I realized we had something here. Like, I didn't know at 18, 19 years old that I was doing market research, right? But that's all that was and is validating. People wanted these things. And so it would be three years before I made another one. Having put it away, served a mission for my church, came back home, started using it again. Everybody wants one. So finally my neighbors convinced me to make them one. They had seen it drive up and down the street a bunch of times, and they. And they just pushed me and pushed me. So I needed a name because I'm going to sell it to them for a business, right? Love, Peace, Hate, War. Hippie bag. Love bag, Love sack. Made. Made one more, and then their friends want one. Then their friends want one and found ways to manufacture a little better, you know, found a foam shredder in the back of this old furniture company that was selling me their scrap foam and just muscled our way, you know, kind of sack by sack, customer by customer, kind of doing the next thing, until we woke up three years later with still a really small business. It was like my side hustle through college. Some friends helped out. I had to wait tables to pay my bills and get through college. And we took it to a trade show and got discovered by a retailer who wanted 12,000 little ones for Christmas.
- [03:54]
A
You know, how many had you produced at that point in time when you got the 12,000?
- [03:59]
B
Honestly, I. We had probably made a total of like a hundred. Okay, love sacks, maybe, maybe. Maybe 150, 200. I don't even know. Like, these were just friends and family kind of orders and, you know, little. We would actually set up tents at the boat show, home show, car show, you know, anywhere we could show these things. And we'd. We'd sell half a dozen and. And we did that for two or three years before we got that big order. But then we had to decide, you know, are we going to build a factory to do this? Because, I mean, 12,000 units is serious business. And there's a whole story, you know, sourced them in China. I spoke Chinese. I was able to read the Chinese on a box at a trade show, which led me across the world to this. It's like I just. Every time I hit a brick wall and was going to stop, I had to then just kind of keep going because the universe was like, you know, you can't quit now. And then. Even after we got the factory built, though, on credit cards, that was, by the way, powered by a tractor, right? We Couldn't afford a proper foam shredder, so got an agricultural loan from the United States government to afford a hay buster. This is a hay grinding machine powered by, like, a John Deere tractor. Had to keep the tractor outside because it's blowing smoke out of its diesel stack and had to, you know, have this hay grinder thing on the inside that we had to modify to shred foam. It was just brutal. And even then, we didn't make any money on this 12,000 unit order because 911 happened. Price of foam went up, price of shipping went up. All our profit went out the window, broke even, and I was just busted, man. I'm 24 years old, I'm $55,000 in credit card debt. I own a tractor, I own a hay buster. I have all these people who want to keep stuffing sacks and had to just figure it out. So we opened a store, mostly because all the other stores in 2001 wouldn't have us. Like, we went to the big furniture retailers and said, look how cool we make these giant bean bags. Everybody loves them. And they're like, look, nobody's going to pay $1000 for a beanbag, you know, even if it's filled with shredded foam, whatever your name is. Ridiculous. Like, this whole thing's ridiculous. Got rejected and rejected and rejected again. So my cousin said, let's open. Let's open our own store. Which was also stupid. And the malls then rejected us. The malls weren't having us. They're like, look, we've got Pottery Barn and Abercrombie and Fitch. What's this crazy love sack thing? But one called us back that had rejected us and said, look, we'll let you in through Christmas. Temporary lease, like the Olympics are coming. We got to fill some spaces in this brand new center. Salt Lake City, Utah, which is where all this was happening. It's where I grew up. And we took it and we tried to make it look great. They said, just don't embarrass us. And. But we actually looked amazing. And we, I think, did as good of a job as we could maxing out my cousin's credit cards to open that first location. And it just worked. And we didn't even know if anyone was going to buy anything. You know, no one had ever seen a giant beanbag store. And it's a weird behavior to come into a mall and flop down. But we had the big screen TV playing movies with the music bump, and we had this whole vibe. And I always, I still believe to this day that's what people want to take home with them is a little bit of that lovesac energy, a little bit of that vibe. You know, it's not just a, a beanbag, you know, to plop in the corner. It's, it's a whole vibe. And, and to this day, I think it inspires our greater ambition, which is to build the most loved brand in America. And I know that sounds like a crazy thing for a little beanbag company to say, but we're not so little anymore. You know, we've branched out into our sectional sofas, which have grown us toward a billion in sales. And, and we have, you know, grand ambitions on the product side, but we also see this opportunity to really create a love trusted brand that makes really good stuff. And I, you know, I could fill in the blanks. 20 years of 25, 26 years of evolution that's brought us to where we think we actually have a shot at doing what I just said, but we're not kidding around. So here we are.
- [07:59]
A
Yeah. In terms of the product today, sustainability has a lot to do with it. And I've heard you say that you want to encourage people to buy less stuff. And by virtue of that, your design, it's interchangeable. You build products that are made to grow with people's lives. So, you know, you start, I mean, it's got a price point on it, right? So maybe young families and things like that. But if you get this piece of furniture, you can change the covers on it, you can change the configuration on it. You've got your technology in it with still have the music sound system inside of it. Yeah, man. So talk to talk. You know, how does the sustainability angle help you with customer loyalty?
- [08:50]
B
Well, first of all, let's back up. We didn't start with any sort of this vision, but LoveSac will be a leader in sustainability, but in a way that people I think will want. Right now, people, you know, everyone agrees that we should be more inclusive, we should be more sustainable, we should be a lot of things. But really consumers, when they, you look at their purchasing behavior, they don't care. Like they say they care, but they're not really changing their buying behavior. So the key is to make sustainability, if you believe in it, useful to people. You know, a lot of times people think when you're buying something like organic or sustainable that it's like less good. In our case, we make really amazing, resilient products and we were just trying to do that. But as we got further down the road, you know, this sectional chair that I'm sitting in right this minute, the seat that I'm sitting on, 17 years old. It's been with me. You know, it's older than my children. And by the way, it's combined with newer pieces. Stealth tech has been integrated. You know, you can own these pieces for decades because they're built to last. That's one half of it. But they were designed to evolve with you as life changers. You can recover them. This is like its 10th set of covers. Smells new, looks new. You'd have no idea unless I peeled the covers off and showed you how old the actual original piece is. But the only reason it can even be here is because, again, it was built to last that long in the first place. But the whole platform was designed to evolve with you as you grow. So this led us. It was like step by step, just trying to make good stuff. Led us to a place where we really unearth the most valuable piece of our strategy that we call design for life. And it's an overall design philosophy that, again, calls for stuff, not just couches. That's stuff that's built to last a lifetime, but can evolve with you as life changes. I don't think there's any other firm on earth designing things in that way. Forget couches, forget cars, whatever. This is a unique approach to product. And ultimately, if we have long enough, we're going to win you over with now our couches. You're going to be a believer in this brand because of what we stand for, because it's not just about recycling water bottles into fabric, by the way we do that. We probably recycle more than all those shirt and shoe companies combined, because we're doing millions and millions of yards of fabric across very large objects. But we don't barely talk about that, because the real sustainability comes from things that can actually sustain. And the bigger point in all this, as it relates back to the bigger picture of business, is you don't have to start with the grand vision. You just need to get off the ground. You just need to find a way to eke out some profits and build something that can sustain itself. And if you pay attention and you're willing to do more than just try and make money, but you're really trying to pay attention to what customers are saying. You're trying to pay attention to the trends that are happening around you and connect the dots along the way. You might just stumble forward to a place like we have, where a grand future unfolds before you. And leveraging the design philosophy that I just articulated, which I think is pretty unique and special, we actually have a shot at building a brand that could someday become the most loved brand. Because instead of trying to sell you the same stupid object every year like the biggest company in the world does, and con you into buying something that was intentionally self destructing in your pocket. And we all know this is happening, by the way. So even though you'd say, oh my gosh, Apple, like, that's the most loved. No, I don't think so. There's a lot of people that worship Apple, but do they? How many people really love that company when we know what they're doing? Not just to us, but to the world and the resources they're sucking out of the globe to just, you know, recycle and sell to us all the time. We're trying to build a brand on honesty. You know, these are the things we are. These things we're not. But, but, and look, our stuff's not cheap, but if you buy our couch, you will buy fewer couches in your lifetime. And that's what we want. And we mean it sincerely. And in fact, the more things we invent now, like the recliner that came out just a few weeks ago, that you can add to the pieces you already own, the more we're proving to you that we mean it. Because when we bring out the recliner, we're not saying, oh, sorry, you should have waited. Now our whole thing reclines. You can add it to what you already have, you can replace what you already have, and soon we're taking trade inside and allowing you to trade it in and trade it up and recycle it right to other people. Like, there is no firm doing that now. I'm not saying that that's the only way to do business. I'm saying that we've evolved to what I think is a really special vision that'll take us to many, many product categories and allow us to compete into the billions. Because we were willing to just stuff foam into sacks and keep going and connect those dots along the way.
- [13:51]
A
Yeah, I love the take on sustainability, the observation that you make that people won't pay for it. I learned that years and years ago in the building industry, you can build the perfect house would be like an Igloo cooler. 12 inches of foam insulation. You could heat it with a candle, you could ventilate it for this, but it would be ugly and people wouldn't like it. So what the consumers vote with their dollars is they don't really care about how efficient a Home is they want it to look good from the curb. They want to have walk in closets, they want to have high ceilings which are incredibly inefficient. High ceilings are horrible, but they look nice. So they've got broad shoulders, three car garage and all of this stuff. But if you say, you know, if you pay 6% more for this home, it'll use half the electricity. It'll, it'll stand up to water, it won't, you know, when it gets wet, it won't explode. You get all, you can do all of these things that are sustainable, but the consumers won't pay for it. And you know, they'll just say, I don't care, I'll pay the high. I'll just burn natural resources to have the home that when people pull up on it like it looks really cool. So you took that sustainability and you must have learned early, that's that, you know, you're beating that drum and it's like, well, people really don't care about it. But the concept of design for life, the concept of having kind of an heirloom or a legacy piece that's going to be with you through your kids, your kids going to college, you can give it to them, you can change it, you can upgrade it and then to make something that, that's durable because like, I mean, look, cereal boxes are getting smaller. Every three or four years, like clockwork, my phone blows up. It stops working, it gets slow. I have to think that there's designed obsolescence into these things. And then the next version of the phone comes out. It's not remarkably better. There's like a couple of features. This one has three cameras instead of two. Doesn't matter.
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B
So a few things. Planned obsolescence is not a conspiracy theory. It is a fact. It is a hard ingrained feature of our modern economy that was intentionally installed originally just to lift us out of the Great Depression. But then it played its way through automobiles and they discovered, you know, hey, you know, you had Ford on one hand that was, you know, you can have any color you want as long as it's black. That's his famous quote, right? Cause that was the most efficient way. And like he couldn't see a reason why anyone would want anything else. But Chevy on the other hand, that was putting now tail fins, different model year to model year, even within sub models, so that by the time yours was a year old, it already looked kind of dated and created perceived obsolescence. Right. And, and then those trends took, you know, played all the way, of course, through fashion and through every industry and these things now we just accept, like truth is, there is no force in the universe telling us that our genes are all too tight. That's not a real thing. That is a ploy by the machine just to get us all to replace our whole gene collection. And if we don't do it, they will use the youth to shame us into doing it by calling us old or by calling us out of date or by telling how stupid we look or whatever. And that's straight up communistic. You know, that's like Maoist era propaganda, right? Being tools, being leveraged against us just to get us to buy a whole new suite of pants. And so I could go on and on like these. These forces are evil and corrupt, but at the same time they're, they're not even conscious anymore. They're just the way the systems work. Because after many decades of executing to that end and training the next generation of, let's say, fashionistas, merchants, buyers, you know, they're not evil people. They're just doing what they were taught to do and create, you know, the next wave of trends and pursue the next wave of trends. But the original intent was absolutely just to rape and pillage and extract more wealth out of the consumer base. And so by us saying overtly, even as a public company to our investors, our stated purpose at Lovesack is to inspire humankind to buy better stuff so they can buy less stuff and be sincere about it. You know, this is actually kind of groundbreaking and kind of risky because there's a lot of business people who, whether they admit it or not, realize that that's the way you grow into the hundreds of billions and trillions is by doing something antithetical to what we preach now, we'll get pretty big, and thankfully we're small enough we still have a lot of road ahead of us that even if we play it out to the nth degree and can't just sell you a brand new couch because our original one is still going with you, we can still get pretty big and pretty profitable and generate a business that's worth a lot of money. And that's what I'm out to do. And so, by the way, if you believe in sustainability or some other, you know, I don't know, well, meaning force that isn't necessarily the driver of your business. It doesn't need to be. That's why with Lovesack, we don't lead with it. We don't come at you and beat you over the Head with guilt, trying to get you to be sustainable. We just do it. We just do it. And you got to go back to first principles. We're connecting the dots, right? We're seeing the trend of sustainability being embraced. It's still decades early, but we're choosing to go there on our. For our own reasons and because we also believe in it. We think consumers will be attracted to it over time. At the same time, we're connecting that dot back to first principles, which is you have to leverage personal interest. And what I mean by that is, like, you have to make people want it on its own merits, right? Because people are going to make decisions, like you said, that suit them. And so if you can find a way to leverage, you know, just people's, Call it greed, people's self interest. That's the right word, leverage people's self interest to achieve the ends that you mean to achieve, then you have something. And so we're not trying to win through sustainability. We're just trying to do it because we believe in it and do it in a way that's good for people by explaining to them, hey, buy this thing and keep growing with it. You'll never have, you know, you may not ever have to buy another one. You're gonna have all these ways to upgrade and change it over time. Isn't that good for you? Might you be willing to pay a little more for that? Not a little more because it's super green, whether it is or not, but a little more because it's good for you and your life. And I think if, you know, and by the way, none of this we had in the beginning, I just have to remind, that's why I wrote the book. Let me save you 25 years. You know, I think we're such a good example that you don't need to have it all figured out. You don't need to have your vision, mission, purpose all figured out on day one. You can take a stab at that. And by the way, we always had something to row towards, but we really evolved into all this thinking over a very long time.
- [20:49]
A
Actually, your career is one that deserves a book. It's a story of taking action, taking radical action. You did speak Chinese. You saw writing on a. You picked up a manufacturer off of a box. Next thing you know, you're flying over to China, you're turning down a job that you had over there and say, I'm gonna start this company. And then you've survived. You've survived through venture capital, you've survived through the Build. You survived through the venture capital, by the way. That's when a lot of people get kicked off the bus.
- [21:26]
B
Venture capital, private equity, and then public.
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A
And you're still the CEO Crazy. What do you attribute your resilience to in your career? And I know that in the beginning of your book, your dedication is basically to your mother. And. And it says, mom, I owe you my. To mom, I owe you my life. What is it about you, in the way that you were brought up, that made you so resilient to be able to go through this journey and be one of the few real founders of big companies, like a Phil Knight, that has been able to survive and thrive?
- [22:03]
B
Yeah. Thank you. I think that resilience is both an ability that can be cultivated and a choice. And here's what I mean by that. Look, I try. I'm trying to teach four kids, we have four children, you know, 16, 14, 12, and 10, how to be resilient, how to be. How to live in discomfort, how to hit deadlines and get their homework in and, you know, develop talents, some that take years to develop through a lot of hard work and how to, you know, lose and lose and lose again at tennis and still keep showing up and get to that 10,000, you know, hours kind of achievement that you can maybe see some results and push through. Right. We can develop these traits in ourselves if we choose to put ourselves in different situations that allow us to develop just like any other, you know, ability. And so there's that and love sack for me, look, I had already, I think, put myself through some of those crucibles growing up. And that's why I dedicated to my mom. I mean, she had me involved in all sorts of things that really taught me the ability to multitask, to develop skills, to put in the effort. You know, I. I play the piano, I've played it professionally, I've performed on stages. I sang and dance, learned Mandarin Chinese. I've, you know, I put a lot of time and energy into my life to develop skills and abilities that you can only develop by persevering. And so I believe in that, and I believe in that for my children. I believe in that for anyone. On the other hand, as it relates back to lovesac, not only was lovesac a further crucible as I had to muscle through just really hard times. You know, as you bootstrap a company and you're also waiting tables, you're paying your way through school, that itself is a crucible. The early days of running the stores, some work, some don't hiring people, firing people. You know, all the things that. That continue to roughen you up and make you stronger if they don't break you. All of that's true. But you also reach a point, like in my case, where look through the. If you read the whole book, you discover like, we had to go through a complete chapter 11 reorg. That was humiliating. This is after I won a million dollars on TV with Richard Branson. The crazy highs, the lowest lows, the most embarrassing, humiliating moments of my life as we reorg. The company had to keep going. Talk about resiliency, right? There's a chapter in the book, quit or keep going, and that came from my mother, because I had. I was faced with that choice. It would have been a lot, frankly, easier for me to quit at that time. Just kind of skulk out the back door. I'd already wrecked a lot of lives, you know, brought this company into a position where it had to be chapter 11 reorg. And I lost all my equity and had to rebuild that back. And frankly, if I wanted to maximize my wealth today, I should sell all my stock and found another company with a few million bucks or whatever and own it outright and build it up and sell that. Like, I know how to do that. But I'm also in touch with myself over all these years, and I've realized I've made the choice now. So this is the choice part. I've made the choice to stay here and build this because not only do I see a grand vision that I want to be a part of, but also I know what motivates me. And frankly, I'm friends with many, many hundred millionaire billionaire people. But that's not what motivates me. Yes, I'm happy that wealth can be had by myself and many others around me because of LoveSac success, let's say. But what motivates me is building. And it's so hard to get a company to the size and scale that LoveSac is on the public markets that's floating by itself, generating income gener cash flow, and has a shot at building a brand that really matters to people. Doing some. Something that really. It's so rare and so difficult that I really want to see it through because I see a path where we can become, like I said, no joke, the most loved brand. The most loved brand because we're the only one that's telling the truth, honestly, and branch out into other categories and everything else. And that's what motivates me. So regardless of whether that's the Best way for me to become the richest, I don't care. And it's not because I'm magnanimous. It's because I know what drives Sean Nelson and that's for me, what, what drives me. And by the way, the most loved brand, if I can get there or even close to that, it's probably also very valuable. It probably will make me quite wealthy and I'll be just fine. But that's just not my core motivation. And so, you know, and by the way, it may be for some, some people just want them the, I don't know, like the points for being, what's it called, a repeat entrepreneur, you know, whatever. But that's not what I'm after. I'm trying to build something lasting. That's, that's what gets me. And, and so because I'm in tune with that, like I said, resiliency has been a choice, right? I've chosen to be resilient. And by the way, now I've chosen to manage myself. And the way that I hire, the way that I staff, the way that I build from the board of directors to the, the team around me in a way that won't just get me sideways and won't I. I've had to escape that founder's trap and not be that impetuous at the same time. You have to maintain a little bit that, of that impetuousness as a founder, as an inventor, as let's call it, you know, the creator of the vision for this brand. Because there was a time where you need to. And so managing oneself in a way judged by the harsh light of the public company demands, you know, for a person who doesn't own the majority shares in this company, for a person who doesn't, you know, Mark Zuckerberg and just have want and control like now, you have to also manage yourself and do it in an artful way and be self aware and self conscious, all of these things. Right? And I love the challenge of that. I love the challenge of it. I love the honesty of it.
- [28:06]
A
Talking about the vision, you've got incredible product focus. So in terms of geography international and then product line extensions, how do you think about leveraging the brand from here? And when you talk about it being the most loved brand, is that globally?
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B
Eventually, sure. But you know, America, look, America is hands down the biggest economy in the world and is going to be for a very long time. And one of the biggest mistakes that a lot of upand cominging brands make is it's so exciting when you get someone from the UAE who wants to license your brand and open a store in Dubai or like the UK or Netherlands or something. It just is exciting. And then, by the way, even the biggest companies you can think of often and even recently come back with their tail between their legs. We're pulling out of Germany, we're pulling out of the UK because it never was profitable. Now, I'm not saying we can't go international. I'm sure we will. But what LoveSac also has developed over time is a lot of discipline and a lot of patience. And that's really the final chapter in my book, right? It's called maintain top ambition with infinite patience. And, man, that is, if you really think about that, it is so hard for entrepreneurs to do that because it just seems antithetical. Like, entrepreneurs are like, no, I'm going to do it today. And by the way, I've gotten pretty far by getting off the couch, go down by the fabric, build the sack today. And that same chapter one in the book, just do something. That same just do something attitude persists today with me, on the other hand, when I cannot lose vision for that grand ambition, right? To become the most loved brand in an honest way. Not loved because, you know, we bought our way there through advertising. Loved, because we've really created value for people. We've managed the brand deftly. We've made the right choices, right? And people love what we're doing, okay? So that's a high bar when I can maintain that, but also be patient enough to not go to the uk, to not go to the UAE yet, to not just branch out into other categories because, oh, it'd be so easy just to make a lovesack dog bed. We could do it tomorrow, right? Make mattresses. We're synonymous with comfort. We'll slap our name on a mattress, and now we're in the mattress. And by the way, we could do a few hundred million. Think about this, J. Do a few hundred million this year in mattresses just by putting my name on one. Because the brand already is synonymous with comfort, and we have a lot of credibility, et cetera. I will not do that. Now, I'm not saying that I won't attack this category or that category, but when I do it, back to first principles, because I know what we're really trying to do here, because I've taken the long road to really uncover it, really be thoughtful about it, really strategize about it, we have great discipline around what? Around that design for life philosophy that I told you about. So if we do any of those things, if we lovesac dog bed again, we had them before and it was a foam bag, had a cover on it for your dog is great. But if we make one again, it will be built to last a lifetime and designed to evolve as your life changes, because that's what we've committed to. And when you can identify a core strategy that's unique in the landscape and then adhere to it like glue, you're going to win something. Now, if the strategy is big enough and broad enough, you can win in the billion dollar realms, which I think we can. So to answer your question, Jeff, we will do all the things. Given enough time, what will we do? We'll do all the things. You know, if I had enough time on earth, I do this thing because you and I can both imagine what a design for life mobile phone could look like. That camera could be modular. As camera technology changes, it could pop out, pop in, that battery could come out, be swapped after a year or two because it's getting tired. There is a reason the suckers glued together and pressed together and they do not allow you to do that. And it's not because it's just a slicker way to design things. No, they masquerade behind that excuse to do exactly what you think they're doing. And I intend to be a truth teller and I intend to, you know, keep and I. And the reason I'm trying to put it out there so others hold me accountable to it, so I don't just slap my label on things and make things because I can get another hundred. By the way, when I attack some of those categories that I mentioned through the Design for Life strategy that I've described, not only will I then create better products in those categories, but there'll be billion dollar extensions instead of just a few hundred million. But that takes a lot of discipline, man. And that's why you hardly see anything from lovesac. You're about to. We're about to start going a lot faster because we've gotten to a point where we have enough engineers and designers and we're cooking multi layers. But that's the reason we've kind of moved so slow. And look, you know, back to your question about resiliency. This is a choice. This is a choice that I've made for this company because one, I believe in it. Two, I know it's right because in my heart, like, I know that this strategy is right, but it's a longer, harder road that requires tremendous patience and discipline. I didn't Always have that.
- [33:18]
A
What is your unique ability in the company? Yes. What's your unique ability? Are you a product guy? Your strategy guy? Leader? Like, if you had to say what my unique ability is and your unique contribution, what would that be?
- [33:33]
B
I think, yeah. Look, I'm good at product, and I'm good at being a part of that team and creative, and I'm a problem solver. But I would say my. And, you know, I think, like, I have some leadership capability and I'm. I'm good at enrolling people and, you know, keeping people focused. But I think the number one kind of core thing that I feel most responsible for is keeping the. Keeping the whole team right. And starts, of course, with my top team, but disciplined around this North Star that I've been describing to you in bits and pieces around our purpose, our mission, our vision, our values, and, by the way, refining those with a scalpel. And we're doing it even right now as we gear up for our own annual kickoff in just a week, you know, we dust off and refine what I call our strategic guide. And that is my baby, right? That is like. And it's not just words on a wall. It's not just one of these, like, brand books or something that gets kind of cracked open when we do a campaign. We live and die by. By those values, by those principles, by those tenets, by those philosophies, and we train, and I train on it kind of endlessly, like a broken record I have for more than a decade, you know, and I'm sure that some of my longest tenure, people are to some degree sick of me saying sort of the same things for like a decade or two, but I have the discipline to do exactly that. And that's what's amazing. And that's why, I know it sounds kind of a bit crazy, but when. When you can be that certain, as I am, that it's the right strategy and it's evolving a little bit, you know, as. As everything should evolve, you know, but the core of it remains the same. And when you can be that disciplined around it for a very long time, and of course, you got to be seeing the results like love Sack's grown because of this. It's not like we're just beating our heads into a wall, right, standing on principle. But when you can have proof of the principle through growth, through success, through profits, whatever, and you're willing to not sacrifice, not just take the easy path, but stick to that strategy, that's how you build something that's enduring that's how you build a Nike. That's how you build a Tesla. That's how you build an Apple. And I. That's the board I want to be on right now. Love Sacks compared to, you know, Restoration Hardware, our house, Pottery Barn, Crate and Barrel, whatever. They sell expensive sectionals, we spill it. Sell expensive sectionals. But that is like comparing Apple to Dell. There was a time when Apple and Dell or Compaq were in the same conversation. That's not the conversation anymore. You know, now it's like, I don't know, Meta, Google, Apple, Tesla, Amazon. Right. That's a completely different landscape for what sounded in the 1980s like banana computer company. My point is that brand, you know, as critical as I am of that brand, has transcended what they began from. And you're going to see Lovesac transcend from being a furniture brand someday to being just. Apple still makes computers, by the way. Right, okay, but. But that's not how we think of them. And that's the best analogy I can make for LoveSac. So, look, you can. If you're listening, you can believe it or not, I don't really care, but I'm going to do exactly that on these rails. And I know it sounds strange coming from a brand that started with giant beanbags with a weird name like Lovesac, but don't forget, most of my name and my stock ticker on NASDAQ is the most powerful word in the universe.
- [37:20]
A
Yeah.
- [37:20]
B
L, O, V, E. And so, you know, why not? If they can do it, like you said, Phil Knight. And this is my point of view, if he can do it, why not me? It's not like he's a mysterious, you know, individual. He's a great business person. There's many of them. But, like, if it can be. If it has been done, it can be done.
- [37:41]
A
Think about the similarities of him grinding it out in his little hatchback car, bringing shoes around to athletes, then needing to go to Japan to get the contracts, where you had to go to China to get the contracts. I mean, a lot of similarity. In terms of your story, is it easier to be true to your purpose when you're private equity owned or when you're a publicly traded company? For you.
- [38:07]
B
Both are hard for different reasons. And by the way, each one of these models, venture capital, friends and family loans, bootstrapping venture capital, private equity, public markets, they're all hard raising money and everything that comes with it. And funding a business, especially a product company, is one of the hardest aspects of the whole game. But they're all different. Like in private equity, you know, you are dealing often with very wealthy, very powerful people who own a huge chunk of your organization, whether it's the majority or not, who have their opinions. And one man's opinion, or, by the way, one man's wife's opinion.
- [38:53]
A
Now that's, That's a mouthful of truth right there. That's. Yeah, that's right.
- [38:58]
B
Girlfriend's opinion can completely thwart what you know to be the right strategy or answer or product or design because they didn't like it in the public markets. Less so, right. Instead of having one or two, whatever bosses you have now, or partners, however you want to term it, you have a thousand or ten thousand. Now, they can gang up, they can come at you. They, you know, and it's public. And so it's. But at the same time, if you're asking me what I prefer, I actually, really, now that I'm on the other side of it, I'm a real big fan of public markets. And look, I'm sure I'll regret saying this someday. I'm sure some activist shareholder or some, you know, unforeseen event or unforeseen political or macro event will cause me to really will. Will bum me out someday. But so far, and I'm six or seven years in, I like the harsh light of truth that the public markets shine on a company. It's kind of sink or swim. It makes money or it doesn't make money. No, I don't want to talk about adjusted ebitda. I want to talk about net earnings after you pay everything, your taxes, even that annoying lawsuit that came out of California that should have never happened, but for some money grubbing attorneys. How much money did you actually make? You know, now you got to be thinking about your workforce now. You got to be thinking about every head count. Now you got to be thinking about your own salary, your own investments, you know, the expenses, how you fly, how, you know, travel, you book and that. I'm just talking about expenses. But it goes all the way down the chain, you know, and so the public, minus some of the annoyances that are real and overblown, the public format is the most honest of them all. And it's the right kind in the sense that my shareholders have some powers. And by the way, there's ways that they can come against me and kick me out or take it, and that's dangerous. On the other hand, that's on me. That's on me to be a good citizen, to be a Good navigator to be a good leader, to be managing that right and managing the company. And so I love the challenge of it and I love the honesty of it. And if I don't suck, I'll, you know, minus any malfeasance, I'll be just fine, you know, generally speaking. And so I would rather have a thousand bosses than one or two, as it were. And that's just me speaking for me. But that's how I feel. And I think that more companies, I think if more companies were held to account by the natural embedded constructs found within the public company landscape, you'd have a lot. There's a lot of businesses that just hide. It's crazy. They hide behind the hype. All they've ever been is losing money machines. Yet the founders are running off with hundreds of millions or billions of dollars and they've created something that just loses money for everyone. And it might be a cool idea, but it's not a business. That's the danger in the private markets. And then that distorts everything because, you know, we look on and we're like, oh my gosh, this guy made a pile of money just by spinning this thing up and losing, you know, and that's messed up. And then, by the way, then they go invest in something else and they do it again. And I think that's like, yeah, that.
- [42:21]
A
Was a specific question that I wanted to ask you because. So I'm a founder of what is one of North America's fastest growing franchise platforms. We operate in property services. We've fired six brands and built a big business in three years putting six brands together. And it's been all family money. So yeah, there's, there's some debt on the business, but it's negligible compared to what it would have cost for us to go out and buy this thing. So we're, you know, we're well within ourselves. And I've thought about, because it's very natural in our space to just build something and then serve it up to private equity and then you start playing it out from there. But I thought, I wonder if we could just skip that step and just go straight to public markets. There are some really great publicly traded franchise platforms. First Service Corporation is one, they're out of Canada. And I've thought about it and you know, it's non traditional and people say you want your money and all that, but it is something that I think about quite a bit.
- [43:26]
B
By the way, don't get me wrong, I again went through all those stages Venture capital and private equity and public markets, there's kind of a natural progression. I think you can skip it. I don't know that it's advisable. I won't give you advice. I'll just say that the fact you're thinking about it's important and I think go back to first principles. For me, the key is really identifying what you want. What do you really want? I think everyone thinks that they just want lots of money. And that may be true and there's nothing wrong with that at all. And if that's true, then make the decision that will get you lots of money or they want lots of money. So then go do this or go do that or go do something again or build something bigger, I don't know. But if you can really be honest with yourself and your partners, whoever they are, and identify what really drives you, like what do you really want, then that will affect the choices you make. And that to me is the more important question. Because, you know, the money, look, you build something valuable and profitable, there will be money no matter what. There'll be money no matter what the question is what do you have really Question.
- [44:35]
A
I mean, the first time around I built a business for 25 years, sold it. At that point it was about the money and that was great. Now I'm 56. I'm much more motivated to build a great company, to build a durable company. You know, when we met with our first 13 employees, it was like, this is the first meeting of a company that's going to be here in 100 years. And we named it Home Front Brands very specifically for that. And we're very particular about the brands that we bring in. They've got to have high performance capabilities that will attract sophisticated owners. So, you know, as we, as we, we built this with great intention and I just don't see it's, it's, it's not about absolute dollars because if it's about absolute dollars, then you're going to take shortcuts, you're not going to make the long term investments, you're not going to, I mean, you might not make decisions that are in the best interest of the franchisees. And at the end of the day, what happens, it's about if their outcomes take precedent to our outcome, then we are going to make plenty of money. And at the end of the day, you know, if it's like x or x plus 30%, the end of the day it doesn't, it's not going to matter. Because people that make that kind of money end up giving 90% of it away before they die anyway. Isn't that interesting? Like the billionaires and they, they all sign the, you know, they spend their whole life scoring on the scoreboard like bananas and then when they get towards the end of it, they're just like, yeah, I'm going to do the giving pledge and I'm going to give it all back. It's, it's so, so if you, if you're going to give it all back anyway, what's the point in sacrificing everything that matters to you just to get it?
- [46:10]
B
See, but I think what you just said, and it's well said, is a peek into the way that you think and a peek into your intrinsic motivations. And if you can be honest about that with yourself and your partners, then that will and should affect the decisions you make. And you gotta be careful because there will always be those around you. It's just like, you know, like any situation, any situation in life, like you might have come to a great understanding with someone, you might have had to fire someone, you know, and you might, you might have been, you know, any kind of tough conversation or negotiation, but then you get others involved. Well, you've totally taken advantage of, oh, you should totally go out, you know, like everything's fine until others get involved. And my point is, as long as you, you know, the founder or whatever can be really clear about what it is you want to build, and it sounds like you are, then the decisions you make to fund your business, the decisions you make to structure your outcomes, the decisions you make are totally and completely valid. You know, and if, and by the way, if it's just a pile up money to then give it away, like if that's what you want to do, that's valid too. Like there are people obviously, because we see them that are driven to do that, but if you're driven to do something a little bit different or maybe very different, that's totally fine. And in fact, I think that too many people somehow don't either don't even take the time to really ask the question, or they're just not honest, or they don't, or others around them don't like their answer and they get cajoled into some other outcome, you know, that may not be good for anyone. And so I think what you're building as you describe, I don't know that much about your business sounds like the kind of business that those franchisees and others want. It would want, would very much like to be a Part of versus maybe a firm that you compete with that has other motivations or other structures driving them. And so by the way, isn't that a blessing for the world? Isn't that like good for the world, good for people? How else do you want to spend your life? How much more of it do you even have? You got a few more decades to grind it out, like, so what? You know, by the way, if you've had any money or you've been around people with money, like I say this to my wife the other day, we went to Cancun for a few days. We love to get away like that together. And we stay at, you know, this nice little resort. But dude, I've stayed on Necker island multiple times. You know, this is like one of the world's most quintessential private islands owned by Richard Branson, blah, blah, blah. You know, the celebrities stay there. It's not that different, man. It's still like water and sand and meals. And to be really honest with you, I think I like our trips to Cancun at just some all inclusive resort that we think is pretty decent with a million other people. We don't care. I've had the bougie. I almost like this one better. And if I'm being honest, but there's people around me that expect me to want to be on Necker, that expect me to want to go with them here, to fly private, to do that. I don't care what they want.
- [49:14]
A
40 grand for the week. And it's the same. It's literally just the same. Yeah.
- [49:22]
B
Diminishing returns. And so what are you even going to do if, you know, with more money, if you're even lucky enough, by the way, to make millions, which many entrepreneurs are, what are you going to do with more of it?
- [49:34]
A
Is that why you say selfishness may be lucrative, but it's ultimately lonely?
- [49:42]
B
Yes, yes. Because, you know, in the end, look, I'm a big believer that all this is great. And we talk about money, we talk about business, we talk about brands. We're trying to build something enduring. In the end, it all comes back to people, though. And we get the opportunity to create jobs for people. We get the opportunity to create good outcomes for these franchisees as you describe.
- [50:08]
A
Yes.
- [50:09]
B
These are people, let's not forget that, living their lives, that are no more unimportant. There are no more unimportant than you are. You know, you or I, like, we might have had the opportunity or fell into some situation that allows us on a path to hundreds of millions or billions or whatever. But there's literally no difference between them and us. We are all children of God. And by the way, if we get so lucky to be in a position of any kind of resource, the way that the only happiness that I think joy that's actually enduring comes through service. And so I get to serve my family and my children. I get to serve, you know, I think we employ like 3,000 plus people at LoveSac now. To me, that's a great responsibility. And, and then of course, just others in my life every day. You know, my community, in my, in my church, whatever. Everything else is just dust. You know, that's one of my quotes. It's on my ring that I wear every day. Everything else is dust. And so, but look, this is my point of view. It doesn't need to be yours. You're listening to this podcast. You can have your own points of view on life and wealth and whatever, but I'm just telling you as someone who's been around it and had a little bit of it, and I would love, you know, more resource in the future. I'd love, loves act to be super successful, but that's just not what drives me. And I never want to lose sight of that. Like, like I, like, I want to live a life that is still focused on people somehow. And that's.
- [51:43]
A
It's admirable thing that you check my point that you made about companies convincing us that we need to change our wardrobes every year. What I've come to believe is that the majority of life is an illusion that's created by others for us to roll around in comparatively to other people and really to stay on purpose is difficult. And it takes work to stay on purpose. And then the more that you define and measure yourself against your own standards, your standards are the greatest thing that you can give other people. And when you start focusing on your standards, it might be that you're doing things that are well below your pay grade to serve your family. But that's just because like that is your standard and that's what you do. And other people are going to say, well, you should have a $250,000 a year chef or somebody doing that. Maybe you do, right, because time management's a thing. But at the end of the day, comparison, they say, is the thief of joy, you know, and, and, and it's. The more that I learn to not give a crap about what anybody else thinks about what I'm doing, the happier and simpler my life becomes. It's Hard.
- [53:01]
B
Yeah, it takes a lot of honesty. Takes a lot of self introspection and then honesty. And so just be honest about what you really like and don't like and don't ever be conned into, you know, pursuing something because you think it's like what you should be pursuing. Stay very focused on what you really want. And I think in my case, I just want to get through this period of my life with kids who like me, who I'm close to, who I know, what the heck is going on. To me that's more important. And I say this in some public forums, a little bit of danger. It's more important than even than lovesack. And look, I take great responsibility as CEO of a public company that's. But if somehow loves that grew into the billions and I lost my family, I would just consider myself that you're at.
- [53:57]
A
So I'm 26, 23 and 20 and we're three for three, you know, as dysfunctional. Well, what I like to say is, you know, my wife and I, when you multiply two negative numbers together, you get a positive. And I think that's what we did. But yeah, I mean, like they're all different in their own way. You know, kind of our mix of, you know, my neglect or, you know, kind of my honest, I think my honesty and lead by example and then her ability to really pay attention to them and what they needed, it just was a nice mix. And you know, they're all doing great. And at the end of the day, that's the only thing that really matters because.
- [54:43]
B
Yeah, well, that's the only thing that really multiplies. Like to your point, all the billions can be given away, but. But that those humans, those three humans could turn into, you know, six or 12 or 36 and eons of generations, you know, possibly for the good. Especially if you avoided some of the worst kinds of patterns that a lot of people are trapped in. You know, patterns of abuse, patterns of neglect that have multi generational rational ramifications usually. So if all you did was was get through life and somehow escape those kinds of real pitfalls, like what does money even mean? And I don't mean to be flippant about it, you know, like we all would like more money, we'd all like more resource, I admit that, you know, but we gotta be really careful about losing touch with what matters most. Somehow the ability to kind of do both a little bit is great, you know, if you can find a way to generate some wealth, if you can find a way to Generate resource, especially a way to make it for others and just create a good environment for others. Like for me, those are worthy endeavors.
- [55:58]
A
So it's a life well lived. I don't want to open up another can of worms. So maybe this is just a comment, but I've really over the. In my 50s, I've become aware that my life's more about subtraction and simplification and taking things away. Addictions, phone, screen time limitations, anything that people are doing with drugs or alcohol. You know, like, the more things that you can take away, the happier I get, the more simple my life gets, the more distractions and to have the free space for my mind to organize the universe and calm the swirl for other people and communicate well, it's really about taking it away. And as you were talking about LoveSac and how it's less. Right. It's a single piece, but it's really, it's not going to fall apart in three years or four years, you know that this is going to be your couch. It resonates with me in terms of simplification and the more that I simplify my life and main focused on, you know, be able to stay focused on the most important things by subtracting things that just, just don't matter. But like, unfortunately, I had to wait until I was in my 50s to learn that.
- [57:09]
B
But, you know, I think it's great wisdom.
- [57:12]
A
Yeah.
- [57:12]
B
And I'm constantly, you know, trying to check myself on that because look, I. I have a lot of hobbies. I love motorcycles and cars and things like that. But I, you know, I try to be very thoughtful about it. Listen, if it doesn't, if it, if there isn't a way to bless people's lives through it, I guess I don't know how else to say it, then I really check myself on any of that stuff. And so like, I don't think, like, I don't think stuff is necessarily inherently bad. In fact, I think you can, you can enjoy plenty of things in this life. Plenty of hobbies, plenty of whatever, you know, toys, if you can really align it with your core principles, whatever those are. So in my case, creating environments that uplift people, that's. Forget Lovesack's purpose. I also have my own kind of stated purpose. So if I can enjoy, let's say, these toys that I'm into under the context of creating environments for others, you know, like my children and their friends, my, my extended family, et cetera, but where I'm solely trying to gratify my own, let's say lust or greed. That's where I try to really be honest with myself. So, you know, am I. Where do I draw the line there? Now, I'm not saying that that's good or bad or noble. I like what you said about simplification. Because they think we have to pick our poisons. We can't have every poison.
- [58:44]
A
Right.
- [58:45]
B
Like, you can try to have the houses and the cars and the planes and the things and. And the vacation. You. You're literally just gonna, like, run yourself ragged trying to live life.
- [58:57]
A
Yeah.
- [58:58]
B
Trying to manage all that crap.
- [58:59]
A
Yeah.
- [59:00]
B
So you have to pick your poisons. And if you're gonna have any poisons in your life, whether it's, you know, whatever. Again, whatever things. Whatever things. Whether it's entertainment, objects, whatever. I think. I think you really want to find a way to align them with values and principles that matter to you or to your point, they will likely. Those things will likely lead you to less happiness, not more.
- [59:29]
A
Yeah. When the kids were younger, accumulation was combined with experiences. So, yeah, we had dirt bikes, horses, you know, skis, snowboards, all the stuff. Traveling around, doing all that. And, you know, and. And that's. And that's great. So there's. There's a balance for everybody. But I know we're heading towards the top of the hour. Maybe if we get back together again, we could talk about your experience with Richard Branson on the Rebel Billionaire. But just one, One quick question about that, and then I'll. We'll get out of here. Did it make an impact in your life? Did it change anything? Did it. Did it raise your. Your celebrity in a way that was. That was permanent or was it just another. Another thing at that point in time? Did it make a big. Did it make a difference?
- [60:19]
B
That's a big can of worms. There's a lot that came from my experience on the revolutionary. I won a million dollars on TV with Richard Branson. I was made president of Virgin Worldwide. I was definitely kind of a. A mini celebrity for at least a minute. This is right before social media really took over. So it didn't endure that way for me. Look, it was, it was. It was an investment when we sorely needed it. We had a lot of debt at Love Sack, and so that was very valuable to me. On the other hand, you know, I learned. I'd say one of the things that I took away from being president of Virgin Worldwide was appearing to all of his, you know, these businesses around the world, these billion dollar trains and Virgin planes and Virgin mega stores and Everything else. And I. And I. And I say this with a lot of love. At a young age, I realized, because I was 27 at the time, and I got to travel and meet all these CEOs, talk to them, get into the business. Every company screwed up. Every organization has its dysfunction. It's, you know, challenges, it's urgencies. So if you ever feel that way as a captain of anything, just understand, like, that's the modus operandi. It's always going to feel a little bit screwed up. And every person you meet took an easier path. Oh, why didn't I do that? Why don't you know that one, that one's better, that one's more profitable, that one's easier, that one has more employees, fewer employees, whatever it may be. And so just accept it. You know, I think there's. That's the reality behind the curtain, behind all this glossiness, behind all this wealth, behind all of this success, behind the articles. And once you come to terms with that, you wake up and fight the fight.
- [62:01]
A
Yeah.
- [62:02]
B
And so that was a valuable lesson to learn very young. And I maintain it to this moment. And look, I'm just grateful to still be in the hunt. I'm grateful to have, you know, to have the mic and chat this out with you, and I'm happy to come back on anytime.
- [62:16]
A
Right on. Last question. If you had one sentence to make an impact in somebody's life based on your journey, what would that be?
- [62:25]
B
Oh, one sentence without a lot of prep.
- [62:29]
A
Something I. Something you tell your kids, man.
- [62:32]
B
Yeah, look, it's the advice that I give in my book, my mom gave me, I give to my kids regularly. You can quit or you can keep going, and every opportunity in life pretty much comes down to that 100%. So don't be confused.
- [62:52]
A
Yeah. Sean, this has been really great, man. Thanks for being on.
- [62:56]
B
Thanks for having me.
- [62:57]
A
Right on. This has been Sean Nelson Lovesac with Jeff Duden. We have been on the home front. Thanks for listening.