SPEAKER_01
We are so excited to share this conversation with you. We had Matteo in from Eight Sleeves. He's amazing.

Greg, what'd you have on it?

SPEAKER_02
Matteo gets community. He has basically identified athletes, moms, lawyers, et cetera, and tried to reverse engineer how to get them talking and creating a community-driven marketing approach that I absolutely love. If you're into consumer, if you're interested in community, interested in marketing, this is the episode for you.

Let's just dive right in.

SPEAKER_01
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It's red. Where are we starting? Musk, your boy.

SPEAKER_02
Musk, my boy. That's your guy, dude. Elon Musk.

No he isn't. Oh my god. I thought you were a Tesla guy.

You love Tesla, don't you? I never owned a car.

SPEAKER_01
Drove in an Evolvo Tesla. That's true, actually. Drive Evolvo, in fact.

That's true. Are you anti-Elon Musk?

SPEAKER_02
No. I think Elon Musk is like a big visionary. OK. I like that he lived in Canada. Oh, that's true.

Queens College. Queens, yeah. Yeah, I think my like very briefly Queens College.

SPEAKER_01
Queens University.

SPEAKER_02
Oh, is that different?

SPEAKER_01
OK. Yeah. I don't know anything about Queens College in New York. Queens College is in New York.

That's where Alexander Hamilton went, right? Or he was trying to go. Yeah, I think so. I remember that from Hamilton.

So Elon Musk, interesting guy, visionary consumer, does some weird stuff from time to time to drum up intrigue online. And recently, he does this Twitter poll that has caused a ton of stir. He basically tweeted out about all the stuff that people are talking about with unrealized capital gains and the idea of like taxing billionaires on their wealth.

And he tweets out this poll that just says, do you support me selling 10% of my Tesla shares to pay taxes, basically? Because he doesn't take a salary. He doesn't take a bonus, whatever. So this would be the way that he pays taxes.

What did you think of this?

SPEAKER_02
What I like about Elon, he's like, he gets the internet. Yes. He gets the internet. So I don't know how many people voted.

Do you know how many people? Like millions?

SPEAKER_01
I think it was 50 million, which is crazy.

SPEAKER_02
Yeah. So I think like he got them bought in on this decision. And what was it? Like 50 something percent said, do it?

SPEAKER_01
Yeah, 55, 45, something like that.

SPEAKER_02
Yeah. So I think like now he has, OK.

SPEAKER_01
How many of those were like burner accounts of like Nancy Pelosi in top grabs that wanted to be in there just like bots hitting yes?

SPEAKER_02
Probably. But I think like the cool, OK, what did he achieve? Step one is he achieved just like Elon Musk getting out there, his name getting out there, Tesla getting out there. So like good work.

And step two is now he has Carplosh to sell like a billion dollars a stock. 20 billion. 20 billion dollars a stock.

SPEAKER_01
Insane. 20 billion dollars. The thing that I think is just, I like it, right? He understands the internet.

I think you're totally right. He knows how to drive intrigue without it being like a Tesla ad, right? All of this benefits Tesla, benefits SpaceX, boring company, all of his things, because it's like Elon Musk halo that he creates around all this stuff. But there's kind of a dark side to it, right? Like what if he knew about some bad developments at Tesla? And he tweets this out knowing that like the yes is probably going to win and want him to sell.

And then he goes and sells 20 billion of stock, which like, is technically insider trading. I think if he knew that there was going to be bad developments coming out about it. But now he's like, oh, I have to abide by the Twitter poll.

So I got to do it that way. So I think there's like, it's gray area. It's sketchy territory, especially given he's gotten in trouble in the past for the SEC for what he did a few years ago with the whole like funding secured when there was clearly no funding secured.

SPEAKER_02
Can you remind me what happened again?

SPEAKER_01
He tweeted out thinking of taking Tesla private at $420 per share, which is an obvious joke, 420, and said funding secured. And there was no funding secured. And he basically said like Saudis or someone was going to fund this deal.

And at the time, Tesla was trading at like 350. So the stock spiked. And then the next day it was like funding's not secured.

The stock collapsed. So a bunch of people got smoked, lost a bunch of money, then had bought in thinking that he was being real. And so he got like sort of slapped on the wrist.

He has to have a Twitter babysitter now, effectively.

SPEAKER_02
But yeah, to me, Elon is like typical entrepreneur, always pushing the limits, like asking for forgiveness

SPEAKER_01
rather than approval.

SPEAKER_02
Rather than approval. And he just gets the internet. So like, I honestly like kudos to him.

Like, dude, I think Tesla's at a trillion dollar market cap.

SPEAKER_00
Way over, yeah.

SPEAKER_02
Way over a trillion dollars. And it's all not all through memes. Like they have a great product.

But the lesson there is like memes plus great product equals good things happen.

SPEAKER_01
Yeah. The hype machine and the fact that they don't spend a dollar on marketing. He's doing it all without marketing.

These car companies are spending hundreds of billions of dollars. And he doesn't have to be because of what he's created.

SPEAKER_02
When you go into a Tesla showroom, you can't like test drive a car, right? You can't buy a car?

SPEAKER_01
Yeah. I mean, it's a different experience for sure. It's a completely different experience.

SPEAKER_02
You've got to buy it online. You've got to buy it online. But they have showrooms all over the world.

SPEAKER_01
He understands the internet. You're absolutely right. And it actually feeds into what I want to talk about today.

So let's get our drinks going. And then we can dive into the conversation, which is all related to building hype on the internet. So it's morning.

So accordingly, we're going to have mimosas. How do you feel about that? You a mosa guy?

SPEAKER_02
I just flinched. I literally just flinched for no. I was like, do I trust you with like opening this? I've never seen you open that.

What do you think I was going to do? Spray you? Yeah, I didn't know. You're unpredictable.

SPEAKER_01
All right. So you know what this is going to taste like. So I don't feel like we need to describe the experience of drinking a mimosa.

But I am excited for this because this is better than drinking whiskey at 9 in the morning or whatever time it is. So what do we want to talk about today? Building hype.

SPEAKER_02
Building hype. How do you build hype on the internet? OK.

SPEAKER_01
In the context of mischief.

SPEAKER_02
In the context of, let's talk mischief. Cheers, man. Cheers.

SPEAKER_01
Oh, that's delicious. OK. All right. Mischief.

What is it? MSCHF, for those at home. What is mischief?

SPEAKER_02
So I think they've been doing it. A group out of New York, been doing it probably for three, four years. Yeah, 2016 they got founded.

2016. They've done about 90 drops. And they come up with ideas for how to create hype and sell some stuff.

What is it?

SPEAKER_01
Is it a collective? Like, is it a creative agency? How do you even define it?

SPEAKER_02
So you've seen some of their stuff, right? Yeah. Like, you saw. It's epic.

What did you see? Jesus shoes was a big one. Yeah.

SPEAKER_01
So let's actually talk about a couple of those things. They became really well known. It's this former BuzzFeed employee, Gabriel Wally or Whaley.

Sarcissing in 2016. They're like the island of misfit. They didn't want to fit in.

They didn't want to do anything the normal way. And they started building this insane credibility and hype via these crazy drops. And they were all viral.

So they did this Jesus shoe that you just mentioned, which was literally a Nike shoe. And they had taken water from the River Jordan and put it into the sole of the shoe. And they sold it like, what did they do? A thousand of them or something.

There was very few pairs. They marketed it. They went totally viral, sold all of them out.

Then they had the little Oz X, Satan shoe, which was from his music video, Montero. And they put drops of blood in the sole of these shoes. I mean, it was crazy.

It was completely nuts. But went totally viral. Had a lawsuit with Nike because Nike was like, we didn't allow you to use our shoes to do this.

They have this product, a voluntary product recall, which was like, you can give your shoes back if you want, but no one did. All the celebrities are wearing them. They did the guns to swords.

That was really cool. They like, if you traded in your guns, you could get them melted down, converted into a sword, and returned to you. And like Grimes took one of those swords on the red carpet, was all around.

So they do this insane, insane product drop stuff. And they sell out immediately. And there's unbelievable virality around it.

And did you see their resollin?

SPEAKER_02
What was the resollin? With the Andy Warhol?

SPEAKER_01
Yeah. Let's talk about this because it relates to NFTs too. It's like a similar concept.

Tell them. So Andy Warhol, the artist, they bought a piece in Andy Warhol original for $20,000. One. It's like a, we'll post it online. It's basically like a pencil drawing.

I mean, I'm not an art savant, but it looks like a pencil drawing to me. And they bought this piece, and they went and created 999 identical forgeries of it. And they like documented the whole process.

You know, the pencil drew it out. They like aged the paper, made it all look exactly the same, removed any trace of what the original was. They put it into the stack with the 999 forgeries.

And then they sold 1,000 mischief forgeries, basically, for $250 a piece. So they had bought the original piece for $20,000, and then they made $250,000 on selling these 1,000 forgeries

SPEAKER_02
immediately. And that's the cool thing about mischief is if you go to their website, which is, it's actually a really cool website, every single one of their drops has a bunch of press. So the Warhol thing had a bunch of press.

It was everywhere. Jesus Hughes had a bunch of press. It was everywhere.

Everything they do, they reverse engineer getting coverage on blogs and stuff like that. And I think that's a really interesting way of building a startup, or building a company or building a product, which is, OK, what can I build so that people will write about it? So I'll give you an example. April 2020, quarantine, COVID is already happening for a month, two months now.

People's hair was getting long. So we created, they check out created a website called, Do You Probably Need a Haircut? And it was this way that it paired you up with virtual barbers to cut your hair. And it guided, your wife would be a FaceTime with a barber in New York, and she's cutting your hair, and she's telling you how to do it, he's telling her how to do it, cut like this, cut like that.

And it went completely viral. Today's show on Fox, ABC. Real viral.

Real viral. Like tens of millions of visits and views and stuff like that. And we built it in under four hours, from conceptualization to building it in under four hours.

SPEAKER_01
What's the realization? What was the insight you had there? Is it just that in the modern viral digital age, hype is the ultimate currency?

SPEAKER_02
What Mischtiff understands really well is that when you understand culture, you could create products around culture. So at the time, with You Probably Need a Haircut, the cultural vibe was like, oh, my hair is getting long, I'm growing up my hair. Everyone was just kind of talking about their hair.

And you couldn't get a haircut. So we were like, OK, let's come up with an interesting viral name. You probably need a haircut.

com and build something around that. So to me, the future of marketing is around drops. Like you probably need a haircut like Mischtiff.

And it's about reverse engineering these cultural moments that you can create these products around it. And the best part about it is that in software, I mean, it's harder to go and create, get blood and put it into a shoe. But with this whole world we live in where no code is a thing and you can go and just build a website, you don't have to know how to code and piece things together, there's just a lot of opportunity just to come up with interesting viral ideas and slap it together.

SPEAKER_01
Yeah, I think what you're hitting on is something that I've thought about a lot. It's like the framework I have around it and it's like the modular economy. I don't know what the right way is to talk about it or call it, but that's kind of how I think about it, which is basically if you have, if you can create hype and you can create that buzz and you know that you can kind of build that and stoke that, you have all of the tools necessary to go and build a business that is highly profitable from day one.

And I think it's funny because like Mischtiff, we've talked about this, they raised venture money, which I actually just don't really get. I don't really understand why they went and raised venture because they seem so anti-normal establishment. And so the idea of raising money, maybe they needed it for some of these things.

Maybe the processes around replicating these things, light aging them and doing all that. Maybe it's expensive and maybe the net profits on these. I don't know.

On that one, it was $20,000 to buy the Warhol. They made $250,000 in gross profit on it. But maybe there was a bunch of costs that sit in the middle of that that I don't know about.

So you need money because you're loss making. But if you can do, you could start a business today and say, like in clothing, if you have a designer, like someone that can design a really cool product, you could do a limited drop of like 1,000 of something or 100 of something. If you had a designer, someone that understood distribution, so maybe they have a big audience or maybe they just understand how to go through different marketing channels, drive virality, and then an ops person, basically just someone to do the back end of getting it.

But you can do these things now in a very easy way and just sell out before you actually go buy the inventory. And that's the brilliance of it.

SPEAKER_02
Yeah, that's why I don't know why they raised venture.

SPEAKER_01
What? I actually do you know the story of why they did? I have no idea. They raised from Founders Fund and a few others.

SPEAKER_02
I know they raised at least $5 million. To me, it's like you're building. I didn't get the pitch.

But I imagine the pitch was something like, we're building a brand like Supreme that's internet native around drops and stuff like that, which I totally get. But what I don't get is just do drops that are profitable. Just make money on your drop and use that money to fuel the business.

SPEAKER_01
Yeah, it's hard to scale coolness. This is like another framework. Elon Musk, to go back to Elon Musk, has somehow managed to scale intrigue and coolness to an insane level.

And it's never going to end in that way. But like Supreme, I don't think of it as quite as cool as it used to be.

SPEAKER_02
I think to me it's authenticity. Like Elon Musk, how old is Elon Musk?

SPEAKER_01
45. I don't know, I'm making up a number, 45, 50.

SPEAKER_02
OK, so let's say he's 50 years old. Like I feel like Elon Musk of as a 50-year-old today is the same Elon Musk as 25. But his audience is 10,000, 50,000 times bigger.

Or millions of times bigger, right? So he's just scaling himself. And he's being authentic. Supreme, you can argue, lost its authenticity over time.

It started off in New York in skateboarding culture, right? Now, Mischief, to me, seems extremely authentic. Amazing. They've done 90 or so drops.

One through 90 have been super cool. And they've been learning and stuff like that. But it seems very authentic.

Now, what venture does a lot of the time is it takes you from being inauthentic. Sorry, authentic. What venture does a lot of the time is it takes you from being authentic to inauthentic.

Because when you have the venture, influences you to grow at all costs. And when you grow at all costs, you have to compromise sometimes.

SPEAKER_01
Yeah, you do different things. You make different decisions. And to their credit, so first off, I've talked to the guys at Mischief.

They're amazing. And they are very different. And they think differently about all this stuff.

But it's a different vibe to people they raised money from to their credit. Founders fun thinks differently about venture versus others. And so maybe they're able to continue to bottle it up and scale it.

But these drops are insane. So cool.

SPEAKER_02
Yeah, I mean, honestly, we should bring them on the pod.

SPEAKER_01
Yeah, I would love to. I'd love to. We'll get them on to a future episode, and we'll talk about some of their drops.

But one thing I wanted to do, because we have a guest today who understands hype and has done a really good job building hype around what's kind of like a niche consumer product in beds and sleep. And he built out in front of a completely changing consumer perception. For lack of a better way to put it, no one really cared about sleep five, 10 years ago.

It wasn't cool. It was like hustle culture was in its prime. And it wasn't cool.

And so Matteo, founder of AteSleep, super interesting. They're building around sleep science, and they're building this hype wave in front of people actually caring about it at scale. And so I want to bring him in, and I want to talk about it with him, because I think it'll be really interesting.

SPEAKER_02
Yeah, that sounds like a perfect person to talk to. Let's bring him in. All right.

SPEAKER_01
So we are so excited to welcome in Matteo Franceschetti. Did I pronounce that OK?

SPEAKER_02
Yeah, you nailed it. Got it.

SPEAKER_01
Well done. Matteo is an amazing founder, CEO, founder of AteSleep. We talked about it a little before, but completely revolutionizing sleep performance and sleep technology.

So really excited to have him in to talk about everything hype and consumer and how you build this amazing, amazing company out in front of a changing perception and consumer perception. So thank you for coming in.

SPEAKER_00
No, thank you for having me. Appreciate it.

SPEAKER_01
I'm excited to share more. So what we were talking about before you joined was we were talking about it in the context of mischief. This company that does these amazing product drops and drives all this crazy intrigue and marketing hype around their drops.

And it struck us that you in particular have built something that is this industry that's not necessarily sexy, right? Mattresses. No one really thinks of mattresses as sexy, but you've created this amazing technology overlay and this amazing hype and marketing engine around it. So we'd love to just start there.

How did you do that? What was the insight you had? And why did you start there?

SPEAKER_00
Yeah. I mean, all the credit, honestly, goes to Michael Fander Alexandra. She came up with this concept of sleep fitness.

And I think that is what changed everything, right? Because you start thinking of sleep, not like a boring time of your day that is just wasted, but like a moment for your body to recover. So we always tell everyone that going too bad is like going to the gym. You're doing something for your body to recover, to stay fit, healthy.

And so she came up with this concept of sleep fitness. And once we defined that name, we started understanding our strategy that is all around athletes, top performers, and recovery. And so now if you look at what we do, we have a bunch of athletes.

There was a major fight in New York last week. And the athlete is an eight-sleep athlete. We just signed Justin, who is the number one cross-feeter in the world.

He just won the CrossFit Games, I think, in July. And so we are signing athletes, and we power their sleep. Because now they are all educated and knowledgeable enough to know how important sleep is for their recovery performance.

But there is really no other brand that is doing that. You can think of us like a Red Bull. But instead of giving you a drink, we give you power to sleep.

SPEAKER_02
Yeah. I think what was cool about Red Bull as a business and as a marketing engine was it was super aspirational. So they signed surfers, skateboarders.

And it's like I wanted to be one of those people. So it's interesting that you're taking a similar model, but applying it to a completely vertical.

SPEAKER_01
Yeah. I never thought about that. Actually, the Red Bull example that you just brought up is a really interesting one.

Our friend Mario Gabriel over at the generalist wrote a great piece on Red Bull a while back about the engine that they've created. And it is super fascinating. Because they do all these things that you just, it's not related to energy drinks.

Like they have the Formula One team. They did the crazy jump from space that the guy did, the parachute. And they're generating so much buzz and hype around something and just around the name brand.

And so when you bring it up, like in the context of athletes, you're creating that same hype by having someone that's this crazy high performer all of a sudden talking about sleep and how it changes them.

SPEAKER_00
Because if you, I mean, the first principle is the same, is to give you energy, right? To achieve whatever you want to achieve in your life. You could be a mom, you could be a doctor, you could be an athlete. And so actually, we are looking at some other sports, like winter sports and surfing.

Because the content is really cool. These athletes, they have a lot of energy. They do they, now they make the impossible possible.

And for that to happen, you need to have the energy. You need to be fully recovered. And that matches our story.

SPEAKER_02
When you and the team came up with the idea around, or the insight I should say around sleep fitness, were you like, OK, this is going to be huge. Let's go create mattress product. Or like, can you walk us through a bit about how you came up with the idea and why it, because I look at it, I'm like a software guy.

I look at it like, oh my god, how does he deal with supply chains? How does he deal with?

SPEAKER_01
It's hard. Design. It's hard.

SPEAKER_02
So I'm just curious how you got from A to Z.

SPEAKER_00
So I would say there were almost two phases for us. As a company, there was phase one, there was 2015 to 2017. We launched with the first product.

It didn't even have cooling. So it was more like really a sleep tracker. We sold 8,000 units in pre-orders, go to YC.

I moved to China for a couple of months to build the units. But we didn't have sleep fitness at the time. And then everything changed when Keith, Keith Raboi, and Kozla invested in us.

And so we raised our A. And that is the moment where we decided to substantially rebrand. And the money was also used to build the pod, which is the current product, which is the one that now is really 90% of our sales.

And so at that time, I have been an athlete all my life. Keith, obviously, you know, he's really into fitness.

SPEAKER_01
He's like a 1,000-day streak of Barry's boot camp or something like that, right?

SPEAKER_00
It's crazy. They're on the same, they invested together. And so, I mean, we were just speaking the same language.

And we said, this is not a mattress company at all. We don't even have a mattress expert or a foam expert. But we always and immediately thought of these like from a fitness angle.

Then Alexandra came up with this word that now looks so simple and obvious. But when you have never heard of sleep fitness, you would never think of matching these two words. And we started pitching to people.

And some people love it. Some other people were saying, does it really make sense? But then we started developing the whole brand strategy. And then this started looking awesome.

And we went all in for that.

SPEAKER_01
Yeah, it's really interesting when you kind of bring up like how it all played out that way. Because in every industry and in consumer in particular, there's always someone doing the same thing. And it's like, how do you bottle up something much more exciting, drive intrigue around it? Like, I remember, it's probably 10 years ago now, there was this thing called the chili pad that I remember seeing out there.

It was like, is a pad that had tubes in it that you could feel and it would put cold water into your bed. And it never went anywhere, right? Like, it had an insight and there's probably something to it and it helps you sleep. But you guys have created something, obviously a better product.

And I love the product. I'm a huge fan of it, by the way. I was talking to Greg about it yesterday and just trying to convince him on it to buy one now.

But it's something different about the way that you bottled up coolness alongside this amazing product. And science insight that is so intriguing to me.

SPEAKER_02
What do you say coolness? Do you mean like temperature cool?

SPEAKER_01
No, no, no, no, like sexiness or sleep. Which that piece of it I think is so amazing because sleep is something that no one has ever thought of as like this sexy fitness thing. Everything's all about working out.

You want the like muscles and you go, Barry's Boot Camp and all these workout companies. But suddenly science started to build up that sleep was actually the most important thing for longevity, for your health, for the way you have energy on a daily basis, but also for how long you're gonna live. And so it's just interesting because you built out in front of that and you built this thing and now people are starting to realize it.

You go listen to some of my favorite podcasts like Huberman or some of these other science podcasts, like half their episodes are about sleep and how important it is now. So it's pretty, yeah.

SPEAKER_00
And this angle at the beginning was quite controversial. Even inside the company, we had a lot of people inside the company that they say, but this now is gonna be a very small segment. It's only about athletes.

But at a certain point I realized, look, I mean, this is what I like. I used to be an athlete. So even if you guys really want me to be the face of this company, be out there and be passionate about taking a flight to do something, it needs to be about something I like.

And so that is how we force the thing a little bit. And I think now it's proving to be successful because it's aspirational, right? We are making sleep aspirational and it's all about recovery and energy.

SPEAKER_01
It's the same thing, if I always go back to frameworks, but it's the same mental model as what Nike did with making athletics aspirational. Anyone was an athlete. Like they did that whole brilliant campaign to just do its stuff when they first started launching it, which was it's not just Michael Jordan.

It's not just Tiger Woods. It's not just Serena Williams or whoever it is. It's you.

It's the normal person on the street getting up and grinding away and going to the drive a truck and wants to go for a walk to be healthier on a daily basis. And like that, it's almost an emotional reaction that you feel associated with it. When you have that feeling where you can take something that was previously only for the elite and suddenly it's applicable to everybody.

SPEAKER_00
Exactly. We call them, we call all our users everyday athletes. And you don't have to be an athlete.

Again, you can be a doctor. You could be a mom. You can be whatever.

We want to unlock your full potential. Doesn't matter what you want to do. We want to give you the energy to achieve your peak performance and your peak happiness.

And that starts with sleep, right? And then there are couples fighting around different temperature. There are athletes that want to recover faster. There are people that are just sleeping hot.

There are women in menopause that have hot flashes. So then the category or the audience is pretty broad. But again, and that is the key thing that we had to really explain internally is, it's not that we are for athletes.

Athletes are just the maximum expression of the energy that we want to give to our 100,000 to 100,000 users. But every person is a user exactly like Nike. And so Nike is a perfect example for us.

Now companies that we really admire is Nike in terms of branding, obviously Peloton, and from a technological standpoint, Tesla.

SPEAKER_01
Yeah. Yeah, we were talking about Elon Musk earlier and how he has this unbelievable capacity to create hype around. And he's scaled authenticity.

You said that very well. Like he has managed to, despite how big he's gotten as a person, continue to scale the authenticity of Tesla and these other things he's building. So I think it's a great example.

I have to ask you about supply chain stuff because we're in the midst of what is probably a generational disruption to supply chains globally. I assume you have Asia manufacturing to some extent. How are you managing? What are the key things you're focusing on as you try to work through a period of disruption like this?

SPEAKER_00
Is a shit show. I don't know. I think the team is doing a pretty good job.

I mean, at the end of the day, the simplest but most expensive way for us to fix the problem is to airship units, which obviously for us is quite problematic because they're big. It's not like a wearable. Right. But we are so in terms of having all the units and all the components, we're fine. It's just really a problem of catching up with demand because we are seeing a lot of demand on our side.

Plus obviously, ocean shipping right now is not really an option with the holidays. So we are shipping a lot of units and that is costing a lot of money. The hope is that in the second part of December, we will be able to switch to ocean shipping again.

SPEAKER_01
It's a really crazy environment right now because the ocean shipping, obviously, is traditionally the most cost effective. Air freight somehow has been better for a lot of companies and getting things over. And you take the margin hit because you just need to fulfill the orders.

You guys have the benefit of being direct to consumer. Is that 99% your business or all of your business? And so what I've seen with some of the companies I'm involved with is the wholesale orders are the hardest part because if you're delayed, they just cancel the order. And now that's revenue that's gone.

You're never getting it back. For you guys, I imagine you own the customer. You own the relationship.

You've built that relationship with them. And so if it comes in four weeks versus six weeks, people survive and they'll wait until they can get it. And you're also building something that there's not really an alternative to.

You're the only business out there that's really building on the forefront of this.

SPEAKER_00
Yeah, I think the only challenge is now with the holidays because that is a hard deadline if it's a gift. We were so in when we are perfect, we ship within a week. These are multiple times we were shipping within three to four weeks because we couldn't catch up with demand.

Good problem to have. Yeah. A lot of demands. Now we need to make it on time for the holidays.

Obviously, the port in Long Beach right now is not getting your units on time. More than anything, it's really hard to predict when you will get your units. And so you have to de-risk.

And by de-risking, you fly in units and that is super expensive. So that is what we are doing just to make sure we can respond properly to demand.

SPEAKER_01
So Greg and I have an ongoing discussion and debate that I feel like is a common thread that goes through a lot of these discussions around raising venture capital and raising capital and the process around it and why to do it versus companies that don't necessarily need to do it. We talked about it in the context of mischief that company we were talking about earlier that they raised money actually from Founder's Fund as well. And I think Keith is probably involved.

And it doesn't strike us as one where they necessarily had a big need to raise capital in front of it. So can you talk a little bit about your thoughts on venture capital, why you should raise versus companies that maybe don't need to?

SPEAKER_00
Yeah. I mean, for us, it was not even really an option because hardware, at least for us, when you develop cutting-edge technologies are expensive. There is no way you can do it without raising money.

I still think if you raise money from the right people, they are extremely valuable. There were a couple of things that worked really well for us. First, obviously, the round being led by some of top VCs from Keith and then Trey and now Antonio, Antonio Gracia, with Valor, who was the first investor.

SPEAKER_01
He's fantastic. Yeah. He's fantastic. I know him actually quite well personally.

He's fantastic.

SPEAKER_00
It's a great group. So Antonio has been now in the board of Tesla since 2007, and now he's with us. So that type of experience has no price.

Another thing that worked really well for us was we raised money from a lot of individuals, operators that are extremely valuable. Now Patrick and John Collison, Naval, Pomp.

SPEAKER_01
Yeah, people with big audiences.

SPEAKER_00
A lot of friends in tech, right? Exactly. So then they can open doors. They can help you with recruiting.

They just become friends. So you can pick their brain as needed. Another great investor for us was YC.

So we built a very close relationship with them. I also just went through the YC growth program. So that was amazing because there are great speakers coming in or you just work with the partners.

And so they tell you, OK, the company is reaching a new level and inflection point is what other CEOs need. So you just need to cherry pick the right people. But these people, they can't annex the value of the business because of the knowledge

SPEAKER_02
that you're transmitting. Yeah. Could you talk more about your YC experience and how important that was? Do you recommend people look into it and just a little more color there?

SPEAKER_00
Yeah. I would say it was a major inflection point for us. We got rejected twice.

I love stories like that.

SPEAKER_01
You kept coming back and now clearly, I mean, it's a multi-billion dollar business. It's an amazing business. I love that.

SPEAKER_00
Yeah, it's a funny story because so we apply, we get rejected. We reapply, we get rejected. And so we say, OK, I forget it.

And then I think a new partner specifically for hardware just get higher. I meet him and he says, oh, you have to apply. And I say, no, I don't want to apply again to be rejected the third time.

I have a dignity at a certain point. He said, no, you have to apply. So I go back and with my co-funds, we say, do we do it? We don't.

And we say, we do it, but we apply within one hour. So we are not going to waste more than an hour on this thing. So if it doesn't work, who cares? And then we get in.

But even after we apply, there is a funny story because, OK, we apply. And then if you get selected, then you have the in-person meeting. And you go there, they interview for 10 minutes, but it's known that to be successful, you want to show your product.

The problem is our product is freaking huge, right? So we rent a truck with a bed and a cover. But part of the experience was also with lights and other stuff, the nest that you were having in your bedroom because it was an IoT connected. So we also bring nightstands and the lights that go on the nightstand.

And we go to Y Combinator and in the old way, we substantially build the bedroom. So we take the interview. I don't think they were really convinced.

During the interview, they were a bit probably skeptical about the opportunity of the business. But then after nine minutes, it's a 10-minute interview. After nine minutes, we say, oh, come to see the product.

And they say, what do you mean? We have the whole mattress right there so you can see it. And so they come out and they try the product. And I think they were so shocked that we were there with the whole, that we built a bedroom inside Y Combinator office that probably they said, these guys are resourceful enough that it's worth giving them a chance.

But that was pretty weird because in this whole way, there were all the other founders for not that they were taking interviews, but they were there just with their laptop because most of them are software founders. And then we were there with our mattress.

SPEAKER_01
I love that. I love it. It's so funny.

It's like I keep coming back to this whole idea of variant perception. Have you ever heard that concept? Variant perception. It's like you have a perception of what the future is going to be like that is different from the consensus.

And time and time again, you see these amazing businesses that have been built basically where a founder had or a founding team had a variant perception of what the future looked like. And then they were proven right. And this is a classic example of that to me.

Like Shopify, Toby had this variant perception that the future was going to look very different in terms of how people shopped online and that e-commerce was going to take over the world. And so he built something that enabled that future. At the time when you had the idea, no one really was thinking about it.

And so you capture all of the alpha from that because you're the first one to really have that idea and go build something. And you guys, I see it in the same way of you have this variant perception that sleep is going to become a mainstay and a pillar of people's fitness, performance, life, health, et cetera. And you build something out in front of that trend.

And so it's a classic example of that to me. And it's so cool to see those like pound your head into a wall failures and then it breaks through. And you end up kind of having that moment.

And now you're clearly, you know, you're at the beginning of your S-curve and you're starting to see it. So it's really exciting.

SPEAKER_00
I call the same concept, you need to be contrarian and right. Yes. That is the only way you can be successful. And we are far from being successful, but very successful people, they were contrarian.

So they were saying something no one else was seeing. But then you also need to be right because just being contrarian doesn't mean anything. You screw up your decision.

SPEAKER_01
There were a lot of contrarians out there. Not all of them are right. That is true.

SPEAKER_02
That is true. And remarkable, right? Like I feel like who else is setting up a bedroom in a hallway, right? Who else is sponsoring pro athletes for this particular vertical? Like, you know, Seth Godin, the author talks about remarkable being something that you make a remark over. And I think that that's the key to great marketing and great storytelling is, and it gets you far in life.

SPEAKER_01
Yeah. Big willing to do that one thing.

SPEAKER_00
We want to, yeah, one thing we always, language we always use with our board was to cut through the noise, right? Because particularly in consumers, there is so much noise. So you need to do something different or no one is going to pay attention to you. And then the other thing that is working well for us is really word of mouth.

Even if our product, obviously, it's just kind of expensive, right? It starts at 1500, but 20, 25% of our revenues was mouth. Yeah. So that helped us to scale really fast. Yeah, customer acquisition cost comes down.

Customer acquisition cost drops, yeah.

SPEAKER_01
Yeah, that's interesting. The whole idea of like driving word of mouth with consumer businesses and how did you actually do that? Like how did you bottle that up and kind of try to drive that as a core business strategy?

SPEAKER_00
Honestly, it just happened. I could try to say that we were super smart. Yeah. I mean, I think the way we did it is because people like the product. So at the end of the day, it's product driven.

So if we deserve any credit because of that.

SPEAKER_01
It's like in software, they talk about product led growth.

SPEAKER_00
Yeah, exactly. It's like the same thing with in consumer. And I still think there are a lot of tactics that we did and we are not leveraging yet that will probably accelerate word of mouth.

But the main concept is on one side, there probably is also branding. So it's what we were saying earlier, right? People start being proud of having an eight-sleep. Like do you have an eight-sleep or no, you're missing out.

Right, it's a bit like having a Tesla on a small scale. But there is not that kind of connection with the device. Then on the other side, we're solving a problem, right? We are improving your sleep.

If you sleep hard, we are helping with that. If you're fighting with your partner, like 50% of the couples, we are helping with that. And so it starts becoming a very easy conversation when people have dinner with friends and they start talking about the device.

And the other thing we did, we focus, we call it concentration, right? So because it's not an impulsive purchase. And so what we do is we try to focus on specific communities and try to dominate the community. And that is kind of happening in tech where now if you go on Twitter, everyone talks about eight-sleep.

And so that is driving a lot of words of mouth instead of just being a drop in the ocean in many different places.

SPEAKER_01
I call it narrative domination. Like you just dominate the narrative around the community. But it's so interesting for sleep in particular because with a Tesla, you bring up the example of Tesla, it's a physical status signal because you see me in it.

I drive around, I don't drive around my bed. You don't see me when I walk around the street or like even NFTs now, you can have it as your profile picture. It's like a physical manifestation, a status signal that you can put out into the world.

With a bed, it's much more difficult. So you really do have to perform above and beyond so that people do naturally want to talk about it with people. I think that's fascinating.

That's the challenge. Yeah, it is. It's a really, it's an interesting challenge.

Well, this was awesome. I know we're running up against the end of time.

SPEAKER_02
Before you leave, I gotta ask one question because I live in Miami, you live in Miami, it's not far from here. How has the city of Miami been supportive of the business? And are you happy that you live here?

SPEAKER_00
Yeah, I love it. I used to be in New York and then we moved here now probably a year and a half ago. We were really early.

But I love it because first, now the tech community right now in Miami, it's great, it seems to be in San Francisco in 2015. So I play tennis with friends in tech, I have dinner tonight with you guys and a bunch of other friends in tech. So that was probably my biggest fear when I moved here.

Now, a sort of FOMO. Well, instead, what happened immediately after, now I was so lucky, there are more people here in tech than there used to be in New York. But then at the same time, if you live in a beautiful place where I can play tennis, I can do some sports.

Sometimes I wake up early and I go running at the beach and then I can keep pushing during the day to build the business.

SPEAKER_01
Yeah, it's amazing to see what Mayor Suarez has done in terms of fostering the tech community here. And I know Keith has been a huge proponent of Miami tech and bringing people in and it is really cool. I mean, in a short period of time here, I'm spending time with more amazing CEOs and founders than in any other city I've been to.

I was in San Francisco for 12 years, I now live in New York and I'm down here and I can feel the energy of it. So it is very, very cool to see.

SPEAKER_02
Yeah, I mean, for me, I was living in New York too before. When I moved to Miami, my stress levels just went down. And it's similar to like when you have a good night's sleep too, right? When you have a good night's sleep, unlocks creativity, good things happen.

When you're stressed is, yeah, sunlight, like the weather, like I feel like it's a good situation to be very creative.

SPEAKER_00
Yeah. And then there is also a secondary order effect where even if certain people don't live here, right now everyone is visiting, then let's say really November to May. And people start knowing maybe now that we are here.

And so they ping you. And so these people, if you were flying to San Francisco, some of these big guys, they would never meet you because they are super busy, but when they come to Miami, then they wanna meet as many people as possible. And so you have the chance to meet them.

And so there are CEOs of public companies that came here, they are sleeping on the pod. And so maybe they ping me and say, oh, I'm a tell me Miami. And I had the chance to meet them, which would have never happened before.

SPEAKER_01
Amazing, amazing. I love it. Well, I'm long Miami.

So I'm looking forward to coming back here. Thank you so much for spending the time with us. This has been a blast.

Thank you for having me. Cheers. And where can people find you guys? 8sleep.com and the pod is, the pod pro is-

SPEAKER_00
Yep, and it comes as a cover or as a mattress. So you can retrofeed any mattress you have with our cover. Or if you're just looking for a mattress, you can buy the Lamborghini of beds.

Just go on 8sleep.com.

SPEAKER_01
And I am a user, so I can personally vouch for the fact that this thing is amazing. It has completely, completely changed my personal sleep. So I appreciate you.

Thank you. Thank you guys. Awesome.

Thank you. That was an awesome conversation with Matteo. Absolutely loved it.

What did you have for your one big takeaway?

SPEAKER_02
My big takeaway was be remarkable. If you're creating a product, you're creating a drop, you're creating marketing, you need to be remarkable to cut the noise.

SPEAKER_01
Yeah, I loved that. I loved when you brought that up in the Seth Godin quote. For me, it was variant perception.

Like this whole idea that you get paid for having a different view of what the future is gonna look like and then being proven right. Like the whole thing, I think Matteo said it, of being contrarian and then correct. I really loved that and I came away with that.

So what do you think we can get into the community and hammer around with?

SPEAKER_02
I feel like we've got a lot of smart people in the community. And I actually think we've got a lot of contrarian people in the community. So I wanna know what sort of contrarian ideas that you can share that we potentially could work on together.

SPEAKER_01
So just share it in the discourse. Yeah, so let's jump in the community after this episode drops. We're gonna get in there with you.

Let's bat around some ideas. Contrarian views of the future that we think are gonna be proven right. Let's jump onto that and we're looking forward to it.

We'll see you in there.

SPEAKER_02
Contrarian, right, remarkable.

SPEAKER_01
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