Molson Hart

The internet has both created and destroyed vast profit pools for B2C businesses. Mattresses are a solid case study: the industry has been squeezed by a) price transparency & b) lowered barriers to entry. Tuft & Needle was founded in ‘12, w/ $6k and grew to $100M w/ no VC funding

At the time, Bed-in-a-Box (BiB) or vacuum sealed foam mattress were a new concept. Google AdWords enabled low-cost customer acquisition, gross margins were >50%, customers funded working capital, the businesses were cash-flow positive shortly thereafter. This invited competition.

Meanwhile, vertically integrated mattress retailers that controlled production and distribution began to experience pricing pressure on their lower-end products. The sub-$1k mattress category was permanently impaired.

$TPX $MFRM $SSB felt the impact. Purchasing a mattress in-store was a terrible customer experience. SKUs were different across all stores. Prices were never comparable. It was a back and forth negotiation. Now with a click of a button your mattress arrived at your door.