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The Agile Brand with Greg Kihlström®: Expert Mode Marketing Technology, AI, & CX
#758: Lovesac CEO Shawn D. Nelson on building a resilient brand in an uncertain world
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Sean D. Nelson
The Agile Brand.
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Greg Kilstrom
Welcome to Season seven of the Agile Brand where we discuss the trends and topics marketing leaders need to know. Stay curious, stay agile and join the top enterprise brands and martech platforms as we explore marketing, technology, AI, e commerce, and whatever's next for the omnichannel customer experience. Together we'll discover what it takes to create an agile brand built for today and tomorrow and built for customers, employees and continued business growth. I'm your host Greg Kilstrom, advising Fortune 1000 brands on martech, AI and marketing operations. The Agile Brand Podcast is brought to you by Tech Systems, an industry leader in full stack technology services, talent services and real world application. For more information, go to teksystems.com to make sure you always get the latest episodes, please hit subscribe on the app you listen to podcasts on and leave us a rating so others can find us as well. And now onto the show.
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Interviewer/Co-host
What if bankruptcy, a global financial crisis and other hurdles along the way aren't the end of your brand, but instead a way to help you define what it truly is?
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Greg Kilstrom
Agility requires a willingness to experiment and.
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Interviewer/Co-host
Adapt, not just in your technology stack.
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Greg Kilstrom
But also in your organizational structure and the very culture of your company. It also demands a deep understanding of.
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Interviewer/Co-host
Your customer and a commitment to delivering personalized experiences. Today we're going to talk about building.
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Greg Kilstrom
A resilient brand in the face of uncertainty, balancing the need for both efficiency and innovation, and the critical role of company culture in achieving long term success.
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Interviewer/Co-host
To help me discuss this topic, I'd like to welcome Sean D. Nelson, CEO at LoveSac.
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Greg Kilstrom
Sean, welcome to the show.
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Sean D. Nelson
Excellent. Thanks for having me.
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Interviewer/Co-host
Yeah, looking forward to talking about this with you. Definitely a great story to talk through here, but before we dive into some background on Lovesac and its journey, why don't you give a little background on yourself and what led you to start the company?
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Sean D. Nelson
Yeah, I mean, Lovesac is a saga we began because I had the idea to make a giant beanbag when I was about 18 years old and got off the couch, drove down to the fabric store, bought the fabric, brought it home, cut it up, made it. It would fill the back of a truck and everywhere we took it everyone just lost their mind. Like oh my gosh, that's so cool. It's actually full of foam, not beanbag beads, chopped up camping mattresses kind of thing. And people just loved it. So it became my side hustle in College by 2001, opened our first retail store called Lovesac because all of the furniture stores wouldn't have Us. And so that was like our last ditch effort, and it just exploded. And then from there grew into, you know, a little retail chain across the west. And we had people asking about the couch that's in the corner. So then we started inventing clever couches that could be shrunken down like our sacks. And that led us to what you see today, which drives 90% of our sales sactionals and has grown the company toward a billion in sales. 700 million, give or take. And we're a public company listed on nasdaq.
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Interviewer/Co-host
Yeah. That's amazing. Yeah. So let's dive in a little bit. And I want to start towards the beginning and some of the early challenges and lessons that you learned. And you've openly discussed Lovesack's journey through Chapter 11 bankruptcy early in the company's history. What was the single most crucial lesson that you learned from that experience that still informs your decision making today?
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Sean D. Nelson
Yeah, I mean, you know, it's a complicated scenario that led us to a situation where our venture capital partners wanted to bankrupt the company, take it through chapter 11, exit a bunch of leases that we had signed as, as kids and, and kind of clean it up. And it was dicey, it was scary, it was not certain how it would end up as those situations are, and it was humiliating. You know, it came on the heels of me achieving a little bit of local fame, having won a reality TV show business competition a year before. And so it was very spotlighted. Meanwhile, if you want to emerge and continue to have a company on the other side of that, you've got to keep running, you've got to keep selling, you've got to keep people energized and excited. And that's difficult to do while you're out there shutting down half your locations and whatnot. But that's exactly what we did. And looking back now, I kind of call it my MBA in a box. Right. Like, if you want to see how contracts really play out, if you want to see the teeth in these leases and what they mean in action, there's no other way really to push it to that point other than something like a Chapter 11 reorganization. And so my understanding of all of these things and the stakes at which we're playing, and by the way, the outcomes and even possible outcomes, these are things you can only learn that way. And I'm really grateful for that. I feel like I have a lot of. I know a lot of great business people who haven't had to go through things like that. And there's things I know that they don't. And I enjoy the knowledge and I enjoy the perspective it brings. And of course it only makes the successes sweeter when you're able to recover and of course thrive later on when you've achieved your lowest lows, you can also achieve higher highs, I think. And it's been a really exciting journey since then at Lovesack.
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Interviewer/Co-host
Yeah, yeah, definitely. And yeah, to your point, I mean there's no way to learn like that firsthand experience. And I'm sure it taught you a lot of other things as well that you've been able to leverage in the years since. Another challenge along the way that I know my company and many others dealt with as well is the financial crisis in 2008. And so navigating that while personally facing some financial strain, yet another challenge to overcome. How did you kind of to what you were saying earlier, compartmentalize some of those pressures while leading a team and again, ultimately growing and growing a successful.
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Sean D. Nelson
Yeah, you know what's interesting is 2008, 910 was a housing led recession which of course had a huge effect on the furniture category, home category. It was a tough time. At the same time, because it was so tough, the retailers were apt to make deals with any brand that could possibly find growth. And so we actually grew a ton of retail locations during that time period because the getting was good. Now it was tight and it was tough and money didn't grow on trees. But we really leaned into growth during that time. That can be a scary thing to do. But we saw the opportunity, we took it and it turned out to be a huge platform from which we could jump as the market came back later on. Now if I parlay that to today, what's interesting is that this post Covid period, call it 22, 23, 24 into 25 is worse for the home category than 2008, 9 10.
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Interviewer/Co-host
Oh wow.
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Sean D. Nelson
You wouldn't think so, but there was just so much of a pull forward effect. So many people redoing their homes, adding on, relocating, buying furniture, buying furniture for second homes, Airbnbs, who knows that the markets were just absolutely ripping and you know, having to deal with sort of this trough that follows that massive heap of activity is in some ways more challenging than it was in 28 and 10. And so we're experiencing a lot of the same kind of pains and difficulties and it's a different day though. Love sock has 300 locations, roughly 2,000 employees. And we're doing great. We're doing better than probably any of our peers from a Growth, perspective, and from many perspectives, but it still makes it hard. But this is where I think, to your point, early on, when you've lived through the worst kinds of things, you realize you can live through anything. And so you learn to sort of stay cool, be kind, operate with vigilance, and keep a steady hand. And it's amazing to me, I think of it as a huge blessing to have lived through this many cycles, have seen these ups and downs, and developed the stomach to handle these things. And it's not to say it's easy, it's not to say I'm flippant about it. It's just to say that if you want to play at this level, you have to develop a stomach to deal with the uncertainty that is bound to beset you. And it's not often talked about, and it's hard to put your finger on. And it's amazing to me how many people that I think are smarter than me, more talented than me, that I've observed or even gotten to hire and work with can't handle that kind of pressure. And it manifests itself in all kinds of weird ways. And so I think that an entrepreneur, a founder, a CEO, either has developed that ability or not, or maybe was born with it. But it's something that I'm very grateful, I think, to be able to observe.
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Greg Kilstrom
Yeah.
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Interviewer/Co-host
Yeah. Well, and I think the, you know, they say change is the constant, but I think the other thing here is that there are always going to be ups and downs. And, you know, whether it's sometimes it's localized to the company itself, but quite often it's economic. You know, it's COVID 19 or it's the financial crisis, which, you know, we, we obviously have minimal impact on, on, on initiating, but yet we're, we're, some of us are still dealing with the, the repercussions of it. So, you know, it's, it sounds like you, as, as a leader yourself, have been able to adapt and, and, and grow, you know, in spite or, you know, in some cases, finding opportunities where they arise within some of those, those challenging times. How do you look at fostering that within the people that work with you, within your teams? And, you know, how do you kind of. Some people maybe are not cut out for that, but those that are, you know, what, what do you do to inspire them?
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Sean D. Nelson
I mean, first it starts with you, the way you show up, your overall demeanor. If you're nervous and distracted or stressed out, it will be contagious. And so you either find a way to Compartmentalize and to mask that if necessary, or better, to genuinely deal with it in a more sincere way. And so for me, I continue. I refuse to just hunker down in a hole and get depressed. I ride my dirt bike, I go water skiing. I do all the same things that I do when times are good, of course, and then get to work and work hard and control everything I can control. So it starts with you secondarily. These are the times when you begin to recognize who can hang and who can't. And you have to root that out. And obviously you want to develop it in your people. And you can, first by modeling it and second by talking about it. And, you know, like you develop any other skill or capability. But if you come to the observation that someone can't, Hank, and they are going to crumble under pressure or treat people poorly or manifest it poorly, you have to make changes. And by the way, it's not enough to be good when it's good. You need people around you, particularly at the top. Look throughout an organization. You've got thousands of people, and not everyone has to have the same capacity or skill set. But especially at the top. I have this little shaunism I live by. Get it right at the top, and the rest takes care of itself. And if you have something wrong at the top that's maybe cataclysmically wrong, structurally wrong, you're going to have major problems and you can't hide from it.
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Interviewer/Co-host
Yeah, yeah, That's a tough thing for a lot of people. I mean, I know myself, you know, I've. I've always had a hard time making tough choices like that, laying people off, whatever the case may be. You know what, what's your advice to those that are listening to that? Totally agree with what you're saying and yet still have a hard time when it comes to, you know, there's lots of excuses. Well, they're. They're good in xyz, but they kind of look the other way when, you know, how. What. What's your advice to those leader? Like, how can they. How can they think differently about that?
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Sean D. Nelson
Look, nobody's perfect and including, you know, of course me. Of course. And people should be given some latitude to have shortcomings. But if they're fundamental. And again, the higher you get in an org structure, the greater the demands to be a complete person. So my resounding advice is, don't let somebody else F up your career. Don't let somebody else F up your company. That's what you're doing. If you're turning a blind eye to these things if you're unwilling to deal with them. And by the way, when I say your company, it's not about you. It's about the other 2,000 people that work here. Like, don't let somebody's bad behavior, inability to be coached or to show up and perform ruin it for everyone. There's just too many lives at stake that's on the people side, let alone the, of course, investor side. There's a lot of investors who expect you as a leader and a manager to make the tough calls. And by the way, just because they're tough calls doesn't mean you have to be inhumane. You can treat people very humanely, but it still makes it. It still is difficult, and I respect it. I've lived. I have. I can think of times in my early career where I was like just a crybaby, having had to part ways with a business partner at times and this or that, and I felt so terrible. I mean, it made me really emotional. But that's why they pay you the big bucks, right? Like, that's, that's what comes with the title, the responsibility and the opportunity.
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Interviewer/Co-host
I really like the point that you made as far as when you make tough decisions like that. It's. It's also about everyone else in the company, you know, because chances are if, if someone is. Whether they're problematic or what, whatever the challenge is, it's affecting everyone else in the company. It's not, It's. It's not just that one individual. You know, I think there's. There's probably plenty of opportunities for that. That person to find something else in their. In their career or whatever. But I think it's also. It's not a.
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Greg Kilstrom
It's not a selfish thing.
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Interviewer/Co-host
It's a thing for everyone in the organization to have a better job and better experience in their. In their, in their work so that the company benefits. Right?
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Sean D. Nelson
Absolutely. And by the way, just because someone maybe didn't work out in your organization ultimately, or you made the determination that that's the case, doesn't mean that they can't have wild success somewhere else, maybe even more. I've seen this happen many times. You know, there are. There are so many factors that are pulling on success. You know, whether you're talking about the company, the brand, or even just an individual contributor. You know, it's chemistry, it's personality, it's timing, it's industry, it's outside forces, it's inside culture. And so just because that concoction ended poorly for someone, let's say, in your org doesn't mean in a different concoction. They can't totally thrive. And so you just have to remember that. And in fact, usually. Usually when I've had to make those tough decisions, it's, of course, worked out for the org, but it's also worked out for that person. And it was almost, like, sad that it didn't come sooner sometimes for them.
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Interviewer/Co-host
Yeah, yeah. It's like. Yeah, it's like you're wanting to do the right thing, but the right thing sometimes is letting everyone go their way or whatever.
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Greg Kilstrom
Yeah.
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Interviewer/Co-host
So I feel like we've talked a lot about challenges here and stuff, and I appreciate your. Your insights and, you know, from. From your leadership. Now I want to talk a little bit more about opportunities.
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Greg Kilstrom
You know, where.
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Interviewer/Co-host
Where do you see the biggest opportunities for. For a company like lovesac, and how are you preparing the company to navigate them?
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Sean D. Nelson
Yeah, look, our ultimate goal as a business is to build the most loved brand in America. And it's on the backs of products that could be with you the rest of your life if you want them to. And that's kind of the DNA for our brand. Right. We call it Designed for life. It means we make things that are built to last a lifetime and designed to evolve as your life changes. We're proud of that. Customers love it. They can come back in a few years, add to it, grow it, change it, improve it, recover it, rearrange it, change the shape, you know, pare it down. It's great in a divorce, you take, you know, but, like, it's just so flexible. You talk about agility. Our product, by definition, is rooted in agility and the business model around it is, too. You know, we ship in days. We never drop our fabrics so that you can come back in six years and add on. And that's. None of my competitors can do that because it's such a. Beyond, even the product, it's such like, a commitment to a business model that's unique. But with any kind of uniqueness comes the spark of a brand. You know, the reason you can love or hate. You know, pick someone polarizing. You love or hate Elon Musk, you can love or hate Trump, but you know who I'm talking about, because they have a brand, and that brand, for better or for worse, is a personality. And I think the same is true for brands in general. And brands matter. You know, it's easy to. In the day of AI, in the day of Amazon, all the copycats, all the knockoffs, to really get cynical about, you know, everything's been done and everything's been made cheap and how, you know, people still resonate kind of at the soul level with brands, just like they resonate or don't with people, as I just described. And if you can resonate, you have a shot at capturing their attention, their investment. And so you have to have something sharp, you have to have something differentiated. You have to dare to be bold and different, just like the most polarizing people, so that you can have a shot at resonating with someone. Otherwise, you're just lost in the AI menagerie of sameness and, you know, vastness.
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Interviewer/Co-host
Yeah, yeah, I mean, I agree. I mean, I think people want. They want a brand. They also want a story, right? They want something. And maybe some of that is that idea of something that someone can carry with them through various stages of their life or things as well. How do you look at building the story of the brand as something that people can really relate to and bring with them again throughout their journey?
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Sean D. Nelson
Well, the first step was identifying what that is, and it took us, sadly, better part of a decade or two to figure it out. This design for life philosophy that I described, you know, we were always doing the thing. We were making good products. We were making products that people could keep a long time, because that's just. I don't know, we're just following our instincts. But by the time we articulated it and memorialized it and really sought to understand it ourselves and then intentionally build our brand around it, around maybe 2015, that's when LoveSac really exploded and we paired it with an advertising model. But it's like once you have a message and you can pour some fuel on top of it, if that message is a good message, if it's a message that can resonate with people, then it's going to work. And now the task so we understand what our message is. And it took us a long time. And that's the thing. People sometimes want to have it out of the gate. You might not. You might have to just kind of follow your instincts for a while and just kind of keep doing things and let it emerge as long as you're looking for it. There were a lot of years there where I don't think I was really looking for it as sharply as I should have been. I wasted some time not being more intentional about trying to nail down what that ethos is, what that brand is, what. What is our, you know, positioning that really sets us apart. But once you have that now the chance is to protect it, to do nothing outside of it, and to expand it simultaneously to look for other opportunities to, let's say, look around your home and make things that are built to last a lifetime but can evolve with you as your life changes. And if we do that thing, I think we can have great confidence that that thing is going to resonate with people. Some of the same people who bought into our products from the outset because they clearly, whether they understood it explicitly or not, and most don't. I don't think most people stop thinking about design for life or. But they. It resonated with their soul. It resonated with their brain. They felt something. Okay, so now do that again across other categories and with other business opportunities, whether it be in the home or whether it be in services and other realms. And so look, as a business, my goal is to build the most loved brand in America. And I think we can build it into the billions. And I think we can not just play with furniture and products in home, but other, other ways that are less intuitive about how one might grow this unique brand. And I'm not going to get specific because we're kind of secretive about it, of course, but that's. And that's what I'm here on earth to do now. It's like, I'll go as long as it takes, as long as they'll have me. You know, I'm the CEO of a public company. You know, they could rally around me and fire me tomorrow, but that's. I love that. I gotta be good. We gotta be good. We gotta perform. We gotta put up earnings, we gotta put up profits. I love the transparency of the public company. It's hard and it's exhausting and sometimes frustrating, but I'm okay with that. Right? And that will only make me and my whole team sharper by having to live up to that. So there's a lot of things about the way that Lovesacks evolved, even though it's been twisted and ugly and difficult and meandering. I'm really grateful to be here with this opportunity because I actually think we can do it. I think we can create a. A Nike or a Apple or a Disney or something out of this little company that no one's taking seriously because we started with giant beanbags. And that's okay. That's all right. I'd rather let them dismiss us at the outset versus coming at us.
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Interviewer/Co-host
Yeah, I love it. Well, Sean, thanks so much for joining today. Really appreciate your insights and hearing about your story. And leadership ideas. One last question before we wrap up. I know you've hit on this probably throughout the entire interview, but I like to ask this to everybody. What do you do to stay agile in your role, and how do you find a way to do it consistently?
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Sean D. Nelson
I constantly challenge. I challenge everyone around me. I challenge all of our thinking, challenge my own thinking. I try to create a culture that encourages people to debate, that encourages people that come at me and help me get to a better solution. And that's not easy. It's tough as a CEO, you know, people tend naturally to capitulate or to agree. But it's all about creating a culture of openness, honesty, and basically insatiability. You know, just never, never satisfied. And it's like, we'll give you the awards, we'll pat you on the back, we'll give you bonuses. But like, what's next?
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Interviewer/Co-host
Right?
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Greg Kilstrom
Yeah.
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Interviewer/Co-host
Love it. Well, again, I'd like to thank Sean.
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Greg Kilstrom
D. Nelson, CEO at lovesac, for joining the show.
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Interviewer/Co-host
You can learn more about Sean and LoveSac by following the links in the show notes.
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Greg Kilstrom
Thanks again for listening to the Agile Brand brought to you by Tech Systems. If you enjoyed the show, please take a minute to subscribe and leave us a rating so that others can find the show as well. You can access more episodes of the show@theagilebrand.com that's theagile brand.com and contact me. If you're interested in consulting or advisory services or are looking for a speaker for your next event, go to www.gregkilstrom.com that's G R E G K-I H L S T R O M.com the Agile brand is produced by Missing Link, a Latina owned, strategy driven, creatively fueled production co op. From ideation to creation, they craft human connections through intelligent, engaging and informative content. Until next time, stay curious and stay agile.
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Interviewer/Co-host
The Agile Brand.
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Tech Systems Sponsor
Before we continue, I wanted to share a key strategic resource that a majority of the Fortune 500.
- [25:55]
Interviewer/Co-host
Are already aware of.
- [25:57]
Tech Systems Sponsor
Finding the best technology, business and talent solutions is not easy. With business demands and competitive pressures mounting, you need to be able to design, deploy and optimize your technology to provide leading customer experiences while driving business growth. Those of you that have been listening to this show for a while know that this podcast is brought to you by Tech Systems, a global provider of technology, business and talent solutions for more than 80% of the Fortune 500. Tech Systems accelerates business transformation for their customers. Whether you're looking to maximize your technology roi, drive business growth, or elevate customer experiences. Tech Systems enables enterprises to capitalize on change. Learn more@techsystems.com that's T E K systems.com now let's get back to the show.