The Outsider's Advantage
May 11, 2017
Author: Josie Sivigny
We started our mattress company knowing zilch about mattresses. All we knew, based on our own experiences as customers, was that mattress shopping sucked and that there had to be a better way.
The mattress industry hadn’t changed in decades. It was the ultimate forgotten corner of the retail world: showrooms of over-complicated products layered with dozens of fancy-sounding ingredients, staffed by salespeople who were like used car salesmen, offering tricky promotions and high-pressure tactics. There was no price transparency and no way to comparison shop. And no one had any incentive to change the way things were. It was lucrative for them, so why change things?
There was some self-delusion too: These big brands sustained themselves by arguing that they were the undisputed experts in the trade. The truth? They weren’t. They were just siphoning away loads of dollars—$18 billion a year by some estimates—from trusting consumers like us.
Whatever belief they had in “craftsmanship” was gone; now it was just a marketing word, a way of putting a nice gloss on an ugly reality. Their only innovation was concocting increasingly deceptive — and as a result, more effective — sales and gimmicks. We saw once-reputable and once-authentic family-owned brands propped up as facades. Those very same families that had built these brands from the ground up were now long gone, having sold to the highest bidder and replaced by investors. Product quality diminished year over year — while ecstatic investors enjoy the cash flow — and the key decision factor appeared to be only “What can we get away with?”
We all learn as children that just because you can get away with something doesn’t mean you should do it. The mattress industry forgot this somewhere along the way. The mattress is a product we all fundamentally need, yet the typical experience of buying one often leaves people feeling disappointed or, even worse, cheated.
We were Silicon Valley software engineers. We didn’t know what we were getting ourselves into. Building mattresses was nothing like building apps — and we had no clue where to begin. We were the ultimate outsiders, but because we had zero experience, we could very quickly identify that the emperor had no clothes.
So we began by asking ourselves what kind of company we would want to buy from, and took it step by step from there. We identified the pains that needed solving, looked for the best solutions, and threw everything else out.
We took the first step in our journey as customers ourselves, and we continue to religiously seek feedback from our customers to stay grounded and in touch with the problem we are solving. In an industry that thrives and grows by keeping customers in the dark, we thrive and grow by sharing everything we can with our customers.
Our experience as outsiders—pioneering a new product category within an age-old industry—taught us several key lessons. These continue to guide our decisions as we grow and build our company:
Seek Your Own Truth
As an outsider, you start with a fresh perspective. You’re not held back by your own biases and by outdated notions of how things should be done.
From the beginning of our business until now, we’ve been assaulted by so-called “experts” and “gurus” peddling business advice. They range from entrepreneurs who have built idolized brands, to investors controlling billions in capital, to a countless number of those who consider themselves business strategy consultants — minted by the most prestigious business schools. They prescribe how business should be done based on commonly accepted business truths and what has worked for other companies.
Ironically, our most valuable advisors have taught us to ignore advice, and that seeking answers in this way is lazy. Beware of the wise men who think they know everything because they’ve “been there, done that” — especially those from your own industry.
Reverse engineering and copying what others are doing is even worse. This easy path can be immediately lucrative, and the track is already laid out for you to follow. But following a path others have already taken using proven strategies and tactics will always lead to a similar outcome. Sure, the money may come easy, but at what cost? We didn’t want to become just another soulless corporation. Beyond the money, the reason we took the plunge in the first place was to build a company where we love to come into work every day.
Find your own path, and follow it your own way. Choose the opposite of what everyone else is doing. Having your own sandbox in which to experiment is one of the most exciting aspects of business.
Be Curious, Not Arrogant
As an outsider, it’s easy to look down on the traditional incumbents with disdain. You point your finger and sneer at everything they’re doing. They’re so set in their old ways they deserve to be toppled.
This contemptuous attitude towards competitors is a defense mechanism that helps you deal with the fears of uncertainty. So you take on an “us against them” mentality, a kind of fortress and moat to the competitive landscape.
There’s some good in this: It gives you the courage to charge ahead. But it’s a mindset that has its hazards. It leads you to focus blindly on differentiation, on one-upping your competition, on standing out for the sake of standing out. You forget the real core and purpose of your business: fixing the customer’s problems and serving them well.
By viewing the competition negatively, you downplay and ignore everything they do — including all the right things. As much as you may not like them, much of what they do and have done are great ideas. It’s important to take emotions out of your approach, so that you can gather learnings that matter. Otherwise, you build a mental prison constraining your ability to see the bigger picture, and the only one held captive is you.
Instead, appreciate and understand your role in the marketplace. Build relationships with your peers and figure out ways to help improve the existing industry as a whole. Seek to understand the cause and effect of what your competitors do — not to copy, but to distill the wisdom of what they’re doing — and explore how you can do it in a new way. Because it’s not just about you. You are a part of the fabric in a continuously improving society, and your competitors are actually crucial to making improvements.
We try to remember to always maintain a student mindset. Not just when we first begin something, but also—in fact, especially—when we taste some degree of success. The moment you begin believing that you are an expert and that you’ve conquered something, you’ll distort reality and become more like the very companies you looked down upon when you started out.
Don’t Wait Around For Someone Else To Do It For You
As an outsider, when you see a problem you don’t need to be an industry expert to fix it. That’s what the experts would like you to believe, and it’s what makes starting up seem daunting and overwhelming.
The world is full of businesses that exist because of information asymmetry: cases where the seller has more knowledge than the customer. Here’s the cold hard truth: Most of the time that imbalance is a false construct, as has been the case in the mattress industry. By making real product research and comparison shopping very difficult, if not impossible, customers rely on a showroom’s self-proclaimed experts to make decisions on their behalf. When both the near-term and long-term reward for the seller is the sales commission, they will naturally recommend an expensive product. And the customer can’t know whether they’ve gotten a fair deal or not — so the seller gets away with it.
Complexity adds artificial value to transactions. It doesn’t take much to topple that house of cards.
Figure it out and make it better, through a systematic process of questioning your assumptions and seeking the truth. The resources to do it are at hand. Design the brand and the product you wish existed.
Stay True To Your Purpose
As Buddhist monk Brad Warner wrote:
“If you want to really change the problems of the world, you have to start with yourself. You have to look at your own action right here and right now. You are the only one you can ever change.”
As an outsider, you question the pre-existing ways of thinking and doing. This journey builds character and will challenge you every step, in every way.
Joining the status quo is always tempting, because that baseline of safety produces comfort and gratification. By taking a stance on the fringes, you will be stretched, strained, examined, ridiculed, and deceived. At times, you will question everything; at times, you’ll hate yourself for being out on a limb. But this is a small price to pay to preserve your integrity and continue your journey. Because what matters is having a deeper purpose. What matters is chasing something real and enduring, not transactional and superficial.
Let’s put it more simply: Don’t chase the money. You can always grow sales. But if you prioritize sales and profits over everything else, you’ll no longer have the integrity or the flexibility to follow your own way. If you build something that fixes a real problem, the money will follow. That’s the reward for choosing uncertainty and discomfort; it’s the reward for choosing integrity.
It is impossible to foresee the future and prepare for what awaits, but that uncertainty is what shapes you and your business. Preserve your integrity and optimize for learnings.
Being an outsider isn’t easy. It hasn’t been so for us. There are too many times when we’ve been overwhelmed by self-doubt and struck by our own ignorance. But we couldn’t do this any other way. “Seeking what is true is not seeking what is desirable,” Albert Camus wrote about his own journey of self-inquiry. We’ve passed on opportunities to boost revenues and take investor capital. As a result, we missed out on press hits that would’ve counted us among the latest and greatest startups — by the standards of public perception — as well as fancy offices and even faster growth. But we view all these outcomes as short-term benefits. They were out of step with what we wanted to build.
We question the established industry because we want what’s fair for customers. We question business “truths” to discover our own truth. We challenge norms and gimmicks, things like psychological price optimization, discounts and seasonal promotions, and commission-based sales. These are proven to work, but that still doesn’t make it right.** Just because you can get away with something doesn’t mean you should do it.**
This approach is fundamental to who we are. No one told us the rules, and we don’t care to learn them. Because when you don’t know the rules, it’s easy to break them.